Don't Fall For It

CHAPTER 3Fast Money

Comparison is the thief of joy.

—Teddy Roosevelt

Every year, Americans spend more money on the lottery than they do on movie tickets, music, professional sporting events, video games, and books combined.^[1] According to a Gallup poll, more than half of American adults play the lottery in a given year.^[2] There are numerous behavioral and psychological reasons people play the lottery despite such poor odds of ever winning. Near misses and actual successes activate the exact same region in the brain, so people who get a few numbers right here and there keep playing because they were so close.^[3]

Our brains have a difficult time dealing with large numbers. People have a hard time comprehending the difference between, say, odds of 1 out of 2,000 versus odds of 1 out of 300,000,000.

The odds are astronomically low that you’ll ever win the jackpot but it’s always fun to dream about what you would do with oodles of found money. Maybe you would do some good with your winnings. Pay off your debts. Buy a new house. Help those in need. Go on your dream vacation. But there’s also a high likelihood you would blow through the money. Research shows people who win $50,000 to $150,000 in the lottery are actually more likely than the average American to declare bankruptcy within three to five years.^[4] And lottery winners rarely save much of their winnings. One study found lottery winners saved just 16 cents for every dollar they won.^[5] A 16% savings rate is better than ...