SALT LAKE CITY — By the time you read this, someone in the nation may be an instant billionaire, winner of the record $1.6 billion Mega Millions lottery that was to hold another drawing late Tuesday night. If so, he or she will be smiling and a bit giddy over an instant fortune that would make even Jed Clampett envious.
Or maybe a lucky group of co-workers will be in the winner’s circle at the press conference, wondering whether they can split the winnings the way they promised in the beginning and still remain friends.
Or maybe there won’t be a winner at all and the jackpot will grow even larger, leading more people to buy tickets coast to coast.
Except in Utah, and you should be thankful for that.
Yes, you should resist the anxious feeling that you are missing out on something to which your friends and relatives in places as close as Wyoming can take part (or that you have to spend gas money to drive to Wyoming to get your own ticket). The same is true for Powerball, which might produce a $620 million winner Wednesday night.
If that sounds counterintuitive, you need your intuitiveness checked. If you’re someone who thinks the state would be better off funding its bulging public schools through games of chance, you’re wrong.
But you might have a tough time convincing your co-workers of that today, depending on where you work, of course. Something about hearing about a winner makes us forget about things like odds and common sense.
In the past several decades, Americans have become, collectively, more and more excited about the idea of becoming rich quick, exerting no effort other than to buy a ticket. Too many people seem to have forgotten about the get-rich-slow schemes, which really aren’t schemes at all but secure strategies.
The Washington Post reported this week that in 1995, Americans spent $112 on lottery tickets for every man, woman and child. Today that figure is $225. But of course not every man, woman and child buys lottery tickets, so that figure is much higher on average for those who do.
It doesn’t take a financial genius to see how this money instead could be a good start to a savings plan that, combined with other smart money decisions, could lead to something substantial that’s a much surer bet and not really a gamble at all. The worst part is that many of the people who buy these tickets have low incomes and really can’t afford it.
Writing for the Motley Fool this week, Daniel Kline reminisced about the blue-collar workers he remembered from his youth who struggled to survive and yet bought lottery tickets.
“They were all fueled by the dream, and by knowing someone who had won a decent sum (usually in the thousands) via lottery or scratch off tickets,” he wrote. “Nobody considered how the few dollars they spent each day added up…”
And if you want to know a dirty little secret, it is that winning isn’t all it’s cracked up to be. Studies have shown that many winners end up bankrupt. People who don’t know how to handle money before they win aren’t any better at it afterward. One study, published by MIT Press, showed that winning only postponed bankruptcy for such people. It didn’t prevent it.
But a different study by researchers at Georgetown, the Federal Reserve Bank of Philadelphia and the University of Alberta found that even having a neighbor who wins the lottery can be bad for you. It seems such neighbors have a higher rate of bankruptcy over time mostly due to buying highly visible items, like cars and boats, to try to keep up appearances.30 comments on this story
There is a much more important reason for being glad Utah doesn’t participate in the madness. Lotteries haven’t lived up to their promises, which are that people can have all the benefits of high taxes without having to pay them.
In a Washington Post op-ed last year, Ph.D. student Jonathan Cohen, whose dissertation is on the history of lotteries, said states have seen no improvement in education rankings due to lotteries. “Instead, the lottery has redistributed money from poor gamblers to high-achieving middle- and upper-class students.”
In other words, enjoy watching the smiling winners from afar, and just be glad your state doesn’t fall for the hype.