Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Tuesday, January 11, 2005

Lotteries, Gambling, and Suicide:
Natural Selection at Work?

Some people spend a considerable amount on their hobbies and habits. I realized about a year or two ago, in fact, that I was spending more each month on photography than most people lose in a year at our town's mini-casino (slot machines and horse-race betting only).

Maybe, in the extreme, gambling is different though. You never hear of people spending so much money on hobbies like photography or model trains or quilting that they lose everything, turn to a life of crime, and/or commit suicide. I find it truly sad that people cannot control themselves to the extent that they become problem gamblers, especially when I heard this CBC report last month:

The Canada Safety Council is calling for a moratorium on casino and gambling expansion across the country because as many as 360 problem gamblers are committing suicide every year.
Dave Friedman argues quite convincingly that people who gamble and lose big tend to be less intelligent and/or less well-informed than the rest of us. He also links to this article at Motley Fool.

One point emphasized by Motley Fool is that the expected value of gambling is negative. And one thing that really irritates me about the gubmnt monopoly over gambling in so many jurisdictions is that the gubmnt finds itself in a serious conflict-of-interest position about the expected value of gambling. They have, for the most part, monopolized the education business, wherein people are supposed to be taught valuable, useful things, such as, "On average, casinos make money because you gamblers lose." At the same time they abrogate this usurped responsibility by advertising all the wonderful things that can happen if you just keep spending your money on gambling.

Bill Sjostrom has this to say about state-run lotteries in particular and gambling in general:

The low expected return on state lotteries compared to other kinds of gambling (including illegal gambling) is well known.

Then again, there is evidence that state lotteries are funded from household budgets primarily by reducing non-gambling items, rather than from other forms of gambling.

When I once expressed dismay, while working at a fund-raising bingo for the Kidney Foundation, that so many of the gamblers were gambling away the proceeds from their welfare cheques, a friend told me to relax. "Think of it as the recycling of tax dollars for kidney research."

Bottom Line: it looks as if most of the people who lose a lot while gambling exemplify the view that state-run gambling is a tax on innumeracy. If it weren't so tragic in general and especially for their friends and relatives, it would be pretty easy to write off the suicides of problem gamblers as little more than natural selection.
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