Tag Archives: Mega Millions

Low-income households spend 9% of their money on lotteries and gambling

J Warner Wallace of Please Convince Me tweeted this story from the Atlantic.

Excerpt:

The Mega Millions jackpot makes this the week to talk about lottery economics, so here’s a whopper: Households earning less than $13,000 a year spend a shocking 9% of their money on lottery tickets, Henry Blodget relays from a PBS report.* Are they clueless? Are they desperate? Are they economical? Maybe, probably, and possibly.

For the desperately poor, lotteries perform a role not unlike the obverse of insurance. Rather than pay a small sum of money in exchange for the guarantee of protection that you’ll need in the future, you pay a small sum of money in exchange for the small probability that you’ll win money to help your lot right away. It is, for lack of a better term, a kind of aspirational insurance.

So often, everyone acts as if low-income people are necessarily more virtuous than other for earn more, such that we should automatically redistribute wealth from frugal people to wasteful people. Instead of redistributing wealth, though, maybe we should be redistributing character and wisdom and restraint. Maybe the reason that the poor are poor is because although they have every advantage living in the prosperous west, that they just make poor decisions.

Black economist Walter Williams explains:

Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And, finally, avoid engaging in criminal behavior. If you graduate from high school today with a B or C average, in most places in our country there’s a low-cost or financially assisted post-high-school education program available to increase your skills.

Most jobs start with wages higher than the minimum wage, which is currently $5.15. A man and his wife, even earning the minimum wage, would earn $21,000 annually. According to the Bureau of Census, in 2003, the poverty threshold for one person was $9,393, for a two-person household it was $12,015, and for a family of four it was $18,810. Taking a minimum-wage job is no great shakes, but it produces an income higher than the Bureau of Census’ poverty threshold. Plus, having a job in the first place increases one’s prospects for a better job.

In fact, the number one cause of poverty is the decision by individual people not to marry before having children. That’s not caused by “corporate greed” or other bogeymen. It’s an uncoerced decisiojn that each person makes. If anyone is causing poverty, it’s the anti-marriage left which subsidizes and glamorizes single motherhood by choice and divorce.

Instead of making poverty more comfortable so that the poor can continue to make bad decisions, maybe we should be encouraging them to do the things that will life them out of poverty. Let’s pay the poor to finish school, get married, stay married, get a job, and wait before having children. And let’s support them by giving them school choice and other freedoms that allow them to escape the underperforming public schools. Fixing poverty doesn’t just mean handing people money – there are deeper issues.

What I also like about this story is that it was tweeted by a Christian apologist. Arguing about philosophy and science and history is good, but if we aren’t concerned about issues like abortion, marriage, poverty and freedom, then that’s not a good sign. Wallace should be commended for his concern for the poor.