Posted by on Oct 29, 2018 in Articles & Advice, Blog, Columns, Featured |

Image Credit: Alex Nabaum

By Jason Zweig | Oct. 26, 2018 12:48 p.m. ET

 

Even as stock markets sank again, one person (or group) made a lot of money this past week: the yet-to-be-identified holder of the single ticket that won the Mega Millions lottery. The lucky winner or winners hit a jackpot worth $1.54 billion in estimated annuity value (or $878 million in cash).

Only days ago, the scramble to buy tickets was highlighting some basic aspects of human nature: Money isn’t only about wealth, and people don’t understand probability. What’s more, the feeling of control can lead any of us to take risks we wouldn’t otherwise run. Even if you didn’t buy a Mega Millions ticket and never would, observing other people’s lottery fever should teach you these investing lessons as little else can.

In fiscal 2016, Americans spent $80.5 billion on lottery tickets. That’s partly because a ticket is a taste of hope: Experiments in the Netherlands show about two out of three people prefer to stagger their ticket buying out over more than one day, presumably to savor the prospect of winning for even longer.

 

 

To read the rest of the column:

https://www.wsj.com/articles/what-investors-can-learn-from-gamblers-1540572491

 

For further reading:

Books:

Charles T. Clotfelter and Philip J. Cook, Selling Hope: State Lotteries in America

Natasha Dow Schull, Addiction by Design: Machine Gambling in Las Vegas


Benjamin Graham, The Intelligent Investor

Jason Zweig, The Devil’s Financial Dictionary

Jason Zweig, Your Money and Your Brain

Jason Zweig, The Little Book of Safe Money


Articles and other research:

Aaron Abrams and Skip Garibaldi, “Finding Good Bets in the Lottery, and Why You Shouldn’t Take Them

Martin Kocher et al., “‘Let Me Dream On!’ Anticipatory Emotions and Preference for Timing in Lotteries

George F. Loewenstein et al., “Risk as Feelings

Ellen J. Langer, “The Illusion of Control

Maya Bar-Hillel and Efrat Neter, “Why Are People Reluctant to Exchange Lottery Tickets?

Henry Fielding, “The Lottery” (1732)

Using the Lottery Effect to Make People Save