Lotteries, poverty and social implications
Why play a losing game? Study uncovers why low-income people buy lottery tickets.
This above link is some news posted on Eurekalert. It’s a study proving that poor people are more likely to buy lottery tickets
"In the study, published in the July issue of the Journal of Behavioral Decision Making, 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. The Carnegie Mellon findings point to poverty’s central role in people’s decisions to buy lottery tickets."
"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 article then goes on and reports a second study
"A second experiment reported in the paper 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."
Dream on dude…
These are two very interesting studies. They indicate a cognitive error with social implications.
What is interesting in these studies is the fact that the simple reminder of their
1) status
or
2) equality/unequality
provided a stimulus that was enough for them to buy more lottery tickets. The question is why someone would indulge in such a maladaptive behavior. The chances of winning the lottery are very few and buying lottery tickets surely costs money, which worsens your financial state even more. Of course, there are some problems concerning the research. What applies to the experiment may not apply to real life. Maybe if the subjects didn’t have an experimenter right there to give them tickets, they would choose some other kind of action. Obviously, the most productive strategy to escape poverty is to work smart and hard, but this doesn’t seem something that could be put in an experimental context.
Surely not this kind of hard work
However, since we cannot have such experiments (and the experimenters probably knew that already), we must try to draw conclusions from what we already have (not to mention that this criticism to psychological experiments is a whole other matter unto itself which will be addressed in future posts) . Even if fewer subjects would indulge in such behavior after the stimulus, in the context of national economics, we have a very strong effect. This shows clearly the connection that exists between psychology and politics, something that, fortunately, the authors address.
"State lotteries are popular revenue sources that are unlikely to go away anytime soon," said George Loewenstein, a study co-author and Herbert A. Simon professor of economics and psychology at Carnegie Mellon. "However, it is possible to implement measures that can actually benefit low-income lottery players and lead to fairer outcomes."
It would be even more interesting to make this experiment in settings where the people are constantly reminded of their status and the social unequality, like poor neighborhoods, or, even business offices with a clear hierarchy. It would be also interesting to explain why this error exists. People are not very good with statistics like Peter Donnelly describes in this video posted on TED
Peter Donnelly: How juries are fooled by statistics
Link: www.youtube.com
However, cognitive errors are also a huge matter unto themselves, since they touch everything that includes decision making, which is pretty much… uh… everything. For now use this post as food for thought and for some further information read below.
Further Reading:
List of Cognitive Biases at Wikipedia
Organizational Responses to Cognitive Bias
