Lotto Probability

[tsg]

Agreed, however are these really the odds? I would also suggest that many people's choices to buy insurance of this type (myself included) is not the result of rational analysis of the odds of needing to claim it, but rather for the "comfort" of knowing it's there should "something" happen. In many ways this would be no more rational a choice than playing the lottery.

Obviously. I would argue just as strongly against insuring for something for the sole purpose of "peace of mind" if the odds of it happening were as unlikely as winning the lottery. Their fear, in this case, is just as irrational as the lottery player's hope.

My point here is that while you are arguing the logic of a rational vs. irrational choices I don't think we can exclude the indivual's motivation for the choice. What seems a rational choice to you, could have been made irrationally by somebody else.

It is possible to reach a good decision by bad reasoning just as it is to reach a bad decision by bad reasoning. It is the reasoning I am concerned with, not the decision.

I honestly don't know if I'm getting value for my health insurance dollar (I'm in Canada, so the costs are somewhat shrouded in mystery for us) but I'm certainly glad to have the insurance. Am I being rational in that case? I can't say that I fully understand or have reasoned through the cost/reward benefits of my situation.

I have no experience with Candadian health insurance, but the sheer cost of medical treatment in the US makes it almost impossible to get treated without health insurance. The fear of having enormous medical bills is far from an irrational one.

 

[macgyver]

Obviously. I would argue just as strongly against insuring for something for the sole purpose of "peace of mind" if the odds of it happening were as unlikely as winning the lottery. Their fear, in this case, is just as irrational as the lottery player's hope.

So what about life insurance then? Especially term life insurance. The reason for it is to cover the possibility of accidental death. Do you know what the odds of accidental death are in North America? I don't, but I would suspect that the chances are very low (albeit not as low as a 6/49 type lottery...but where do you draw that line?)

It is possible to reach a good decision by bad reasoning just as it is to reach a bad decision by bad reasoning. It is the reasoning I am concerned with, not the decision.

Fair enough, I'm certainly not going argue against sound reasoning! My point was more that some irrational (unsound reasoning) decisions are not always negative.

I have no experience with Candadian health insurance, but the sheer cost of medical treatment in the US makes it almost impossible to get treated without health insurance. The fear of having enormous medical bills is far from an irrational one.

Canadian health insurance is a mix of taxation, and fairly low monthly premiums by province (I pay $108 per month to cover my whole family for basically all care except drug costs). Extended health benefits including dental and drug costs are usually a mix of employer/employee contributions...but also relatively small compared to benefit (I know that because I see my drug and dental bills). Personally, I think I've benefitted because of some back surgery, and having had two children.

I'm curious what it would cost for a hospital birth at a US hospital (basic, no complications and two days stay)?

 

[tsg]

So what about life insurance then? Especially term life insurance. The reason for it is to cover the possibility of accidental death. Do you know what the odds of accidental death are in North America? I don't, but I would suspect that the chances are very low (albeit not as low as a 6/49 type lottery...but where do you draw that line?)

According to this, it's about 1 in 35. Considering that life insurance is to support the family left behind, as long as the premiums are not terribly out of line with that figure, it's a pretty sound decision.

I'm curious what it would cost for a hospital birth at a US hospital (basic, no complications and two days stay)?

My son was a pretty typical birth and the bill we got from the hospital was $20,000.

My daughter, on the other hand, had severe complications requiring her to be placed on a heart-lung bypass for 10 days. She was in ICU for another 30 after that. All told, I think the final bill came out to about $300,000.

I have no idea how much my insurance plan costs since I get it through my employer.

 

[macgyver]

According to this, it's about 1 in 35. Considering that life insurance is to support the family left behind, as long as the premiums are not terribly out of line with that figure, it's a pretty sound decision.

Holy Crap! There's a perfect example of an erroneously held belief that dying by accident was a rare occurrence... Did you know it was that easy to die by accident? Seeing as I pay about $40/month for life insurance....it seems like a safe bet. Not to mention, the odds for my family are far "better" (joking) than playing any lotto....

My son was a pretty typical birth and the bill we got from the hospital was $20,000.

My daughter, on the other hand, had severe complications requiring her to be placed on a heart-lung bypass for 10 days. She was in ICU for another 30 after that. All told, I think the final bill came out to about $300,000.

I have no idea how much my insurance plan costs since I get it through my employer.

Holy crap! I like never seeing a bill from a hospital....I hope everything turned out all right for your daughter.

 

[Rasmus]

Rasmus,

Sorry you saw it that way. I didn't feel as if I was attacking you, especially not for being silly. I was merely trying to point out something about probabilities, how difficult it is to understand, and how you can fool yourself that you understand and even when you do understand. I've been there, probably still am.

My bad.

No, you were certainly not attacking me. And I realized that all along. Still, it felt that way.

There isno need to apologize, since you didn't do anything. I worded that badly there. It was an interesting experience, though.

It isn't rational to play lotto and, in order to get some "thrill out of possibly winning", you have to hide this fact from yourself.

Yes, and I always knew that, too. What I ddin't pick up on whee all the very graphical examples of other things that I do that aren't consistent, though, like flying.

Anyway, it seems after a few posts from Dali, tsg, and macgyver, that you have changed your point of view. That can be hard to do. The gain is that you now know more than you did before. That can't be too bad.

True.

Alas, I guess I will play the lottery. I wonder if i will be playing any less frequently now, though, or if I will be feeling less thrilled.

Rasmus.

 

[Rasmus]

But I must say, if I were going to bet money on the outcome of an event (which is what the lottery is), isn't a much safer bet something like a sporting event? 6 horses, 1 in 6 chance of winning. Put your £1 on a horserace every week, I'm sure you'd wind up more satisfied than with the lottery. Smaller returns, but a much greater chance of winning, and the same thrill of anticipation. Maybe that's just me.

I play the lottery, because it is about the only thing I can do to get hold of a sum that I would refer to as "a lot of money". Never mind the chances of that happening, but betting horses won't net me anything that I couldn't also achieve by working hard for a few years.

That is what motivates me to take the low chances in the lottery, really. Irrational as it may be, where else will I get a million bucks?

Having said that, my e-mail provider is offering a free, daily lottery with a top price of a million Euro (I think). Funny how I barely every remember to play that one, even though I quite litterally have nothing to lose other than a few seconds of my time and wear and tear on the mouse.

I will try to be more rational and play that regularily from now on.

Rasmus.

 

[Rasmus]

And another voice in favour of insurances:

A line I hread from a life insurance sales person on amovie once: Two questions: One: If you die, will others suffer financial consequences and hatrdship because of this, and two: Do you care?

Health insurance is definitely worth it.

If you can easily afford the little things, there's a good chance you'll be fixed before you suffer from anything major. I dread living a life where I cannot get treatment for anything bigish because it would just be too expensive.

And I would dread even more to ever having to pay a hospital bill without insurance.

 

[Number Six]

I play the lottery, because it is about the only thing I can do to get hold of a sum that I would refer to as "a lot of money". Never mind the chances of that happening, but betting horses won't net me anything that I couldn't also achieve by working hard for a few years.

That is what motivates me to take the low chances in the lottery, really. Irrational as it may be, where else will I get a million bucks?

Having said that, my e-mail provider is offering a free, daily lottery with a top price of a million Euro (I think). Funny how I barely every remember to play that one, even though I quite litterally have nothing to lose other than a few seconds of my time and wear and tear on the mouse.

I will try to be more rational and play that regularily from now on.

Rasmus.

You could get a million bucks in other ways, such as starting a business or writing a book (assuming you're in a country that has some sort of free market that is). Yes, it's unlikely you'll get a million bucks from that, but it's much more likely you'll get it from that than that you'll get it from the lottery. I'm not surprised that you think otherwise though because lots of people think otherwise, which is exactly the lottery operates take advantage of.

 

[Pete Tattum]

I was thinking of insuring myself for £1million against surviving a lightning strike...The odds must be better than those for winning the Lotto!

 

[BillyJoe]

Alas, I guess I will play the lottery. I wonder if i will be playing any less frequently now, though, or if I will be feeling less thrilled.

I hope so.

But, seriously, I hope you do because, then, you might look for real sources of excitement.

regards,
BJ

 

[BillyJoe]

...where else will I get a million bucks?

Where ELSE? (geez, Rasmus! )

 

[Rasmus]

Where ELSE? (geez, Rasmus! )

Duh!

Quick now: Are my chances winning the Challenge by sheer luck better or worse than playing the lottery?

 

[tsg]

Holy Crap! There's a perfect example of an erroneously held belief that dying by accident was a rare occurrence... Did you know it was that easy to die by accident?

I didn't. Google is your friend

Holy crap! I like never seeing a bill from a hospital....I hope everything turned out all right for your daughter.

She's fine. It was very scary for the first few hours. She was seriously deprived of oxygen until they got her on the ECMO machine. There was some real concern if there was going to be brain damage. But she's 18 months old now and at her last evaluation, the developmental specialist said she's not only ahead of other children who have gone through the same thing, she's ahead of most children who haven't. Her only concern was that she wasn't starting to talk yet, but now she's turning into a real blabbermouth.

 

[macgyver]

Her only concern was that she wasn't starting to talk yet, but now she's turning into a real blabbermouth.

Glad to hear your daughter is ahead of the curve. I also have an 18month old son who's not talking (second child) but blabbering non-stop. It's just that it's not in English. I think it's not uncommon, as his older sister was speaking early but he's not. However, he understands English quite well, and can follow complex instructions no problem. I think he just doesn't NEED to talk to get what he wants. ( Apparently Einstein didn't speak until he was three, but that is contentious )

I also better understand why you would be offended by my sig line, now....

It's "end of life" anyhow, in fact I'm tiring of the whole sig line idea...

 

[tsg]

Glad to hear your daughter is ahead of the curve. I also have an 18month old son who's not talking (second child) but blabbering non-stop. It's just that it's not in English. I think it's not uncommon, as his older sister was speaking early but he's not. However, he understands English quite well, and can follow complex instructions no problem. I think he just doesn't NEED to talk to get what he wants. ( Apparently Einstein didn't speak until he was three, but that is contentious )

My mother has a good point: kids learn to talk when they need to. My daughter has found some very creative ways of letting us know what she wants without speaking. Or getting it herself.

I also better understand why you would be offended by my sig line, now....

I had heard it, and didn't like it, before my daughter was born.

 

[macgyver]

Back on topic (that being lotto probability, not rational vs. irrational):

On my drive in to work this morning...I kept thinking about the 1 in 35 chance of accidental death in the US. This is a lifetime odds calculated by taking the 2002 total accidental deaths divided into the population and then divided again by the avg lifespan of a US citizen.

That means the odds of dying in one year is actually 1 in 2698. Therefore if I'm buying 10 years of life insurance, I'm concerned with the fact that I have a 1 in 270 chance of dying accidentally during my term. My policy will cost me $4800 for that ten year term.

Now the lotto:

If I play "religiously" (pun intended) two times a week for 60 years on a 6/49, by the same logic above the lifetime odds are a little bit better (assuming 1 in 13,000,000 per draw). 6240 total entries would result in a 1 in 2083 chance of winning the lotto in my lifetime at a cost of $6240.

So my lifetime odds of winning the 6/49 are actually better than my chance of being accidentally killed this year....

rebuttal?

 

[tsg]

rebuttal?

The risk of you dying to your family without insurance is much, much greater than the risk of you not playing the the lottery.

 

[GreedyAlgorithm]

The risk of you dying to your family without insurance is much, much greater than the risk of you not playing the the lottery.

And of course it has to be said... that means utility(money) is not linear, so that expected value calculations are not necessarily relevant.

Just like when considering whether to play the lottery.

 

[macgyver]

The risk of you dying to your family without insurance is much, much greater than the risk of you not playing the the lottery.

In this case, that's not really the issue. I'm just comparing the odds on a lifetime scale. Arguing the "risk to your family" is going back to the "is it irrational to play the lotto vs. buy insurance?" I think we've already covered that ground.

In fact, gambling of any kind would be "no risk" if you didn't play, so therefore gambling is an irrational choice by the same logic.

Let's say that it isn't necessarily irrational to gamble, but only irrational if the odds make it nearly impossible to win. In that case, playing one draw in a 6/49 would be irrational, because your odds are 1 in 13,000,000.

However, playing every draw for your lifetime (or until you win) brings the "lifetime odds" of winning the lotto into the realm of possibility. The only question now becomes "will it happen early or late or never?"

I find this ironic, because it suggests that to play once or twice is irrational, but to play compulsively isn't....

The real question I have though, is how valid is the "lifetime odds" calculation?

 

[tsg]

And of course it has to be said...

And has been, and has also been discussed.

If you're going to jump into the middle of an argument you might at least have the courtesy to read it first.