Why do low-income people buy lottery tickets?

July 25th, 2008 - 4:23 pm ICT by IANS  

Washington, July 25 (IANS) Why do people from the low income group invest a large percentage of their income on lottery tickets than do their richer counterparts. A new Carnegie Mellon University study determined that poverty played a central role in their spending so heavily on a product that guarantees negligible returns.

Participants who were made to feel subjectively poor bought nearly twice as many lottery tickets as a comparison group that was made to feel subjectively more affluent.

“Some poor people see playing the lottery as their best opportunity for improving their financial situations, albeit wrongly so,” said the study’s co-author Emily Haisley, doctoral student at Carnegie Mellon’s Tepper School of Business.

“The hope of getting out of poverty encourages people to continue to buy tickets, even though their chances of stumbling upon a life-changing windfall are nearly impossibly slim and buying lottery tickets in fact exacerbates the very poverty that purchasers are hoping to escape.”

The researchers influenced participants’ perceptions of their relative wealth - or lack thereof - by having them complete a survey on their opinions of the city of Pittsburgh that included an item on annual income.

The group made to feel poor was asked to provide its income on a scale that began at “less than $100,000″ and went upward from there in $100,000 increments, ensuring that most respondents would be in the lowest income category.

The group made to feel subjectively wealthier was asked to report income on a scale that began with “less than $10,000″ and increased in $10,000 increments, leading most respondents to be in a middle or upper tier.

Participants, who were recruited at Pittsburgh’s Greyhound Bus terminal, were paid $5 for completing the survey and given the opportunity to buy as many as five scratch-off lottery tickets.

The experimental group purchased an average of 1.27 lottery tickets, compared with 0.67 tickets bought by the members of the control group.

A second experiment found that indirectly reminding participants that - while different income groups face unequal outcomes in education, jobs and housing - everyone has equal chances of winning the lottery induced an increase in the number of lottery tickets purchased.

The group given this reminder purchased 1.31 tickets, compared with 0.54 for the group not given such a reminder.

The study was published in the July issue of the Journal of Behavioural Decision Making.

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