|For once, it's actually a rational investment to buy a lottery ticket.|
Public service announcement - for tomorrow only, buying a lottery ticket is a rational investment.
I noticed that one of my news feeds said that the MegaMillions lottery jackpot has reached an all-time high - an estimated $540 million for the drawing tomorrow, Friday, March 30. The MegaMillions site currently lists the cash-out option at $389 million, which could leave the winner with as much as a $250 million lump-sum payday after taxes.
Most of the time, lotteries are taxes on people who don't understand probability and statistics. But in a situation such as this, that's no longer the case.
With the value of the jackpot so high, the expected value of a lottery ticket is now greater than what it costs to buy a ticket. It costs $1 to buy a ticket, and the expected value of the ticket is $250 million times the odds of winning (1 in 175,711,536) = $1.42.
So, even though my chances of winning are practically zero, the probability theorist in me is compelling me to go out and play the lottery for the first time in my life, since the expected value of a lottery ticket is greater than the cost of the ticket. If you want to please the probability theorist in you, then go play the MegaMillions lottery tomorrow as well, and keep playing until someone hits the jackpot - and if you win, I expect a cut, if my observations on the expected value of a lottery ticket compelled you to buy a ticket ;)