You burn with desire to buy a lottery ticket to try to win the jackpot? The economist Mickaël Mangot decrypts the drive.
it is known that One has very little chance of winning the jackpot, but it doesn’t prevent us from playing various games of chance, Lottery, or other Euromillions. Even more, Friday the 13th, when prize pools are exceptional are displayed. The fault of the “subjective probabilities”, explains Mickaël Mangot, a specialist in behavioral finance and founder of the Institute of the economy of happiness.
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How to explain the power of attraction of games of chance?
Buying a lottery ticket is clearly irrational point of view, an heritage because it is worth less than its price in terms of expectation of gain. Otherwise the gaming operators do not stand to gain nothing… But the players tend to overestimate how incredibly their chances of winning. Behavioural economics shows that we in general tend to overestimate very small probabilities, due to errors of judgment. We speak of “subjective probabilities” that are based on the perceptions.
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These unconscious behaviours have been updated by the studies of Nobel 2002 Daniel Kahneman (awarded, like the Nobel 2017, for his work in behavioral economics). In his “prospect theory”, it shows that in a context of “risky”, when we don’t know for certain the outcome of our decision (this is the case for the lottery), we do not take our decisions in a rational manner, based on the likelihood objective. It also explains that individuals operate by automation – the “heuristics” – that allow us to decide quickly in certain situations, without calling to our analysis.
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This tendency to overestimate small probabilities also works for negative events extreme natural disasters, crashes, airlines, terrorist attacks… And brings there-often the same individuals to make financial decisions very rational, in terms of choice of insurance soucrites for example.
This way to over-react to events that are highly unlikely is accentuated by the media coverage. If the articles or broadcasts mentioning the jackpot winners left so much space to each of the losers, the first would be drowned in the mass, and the psychological effect would be quite different. We have a tendency to overestimate more the risks and chances when our attention is brought upon them.
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Play the lottery is so completely irrational?
Yes, a point of view of heritage. On the other hand, in terms of happiness, it can make sense. Because the big dreams are made of… At a lower cost, and more! For 2,20 € (price of the grid lotto, you dream the whole day!
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A well-known concept of economists comes into play here: the usefulness of anticipation. The work conducted shows that there are three stages in the consumption: the anticipation of the purchase, the experience and adaptation. When one buys a house, the peak of happiness to be found upstream, it is linked to the anticipation.
Winning the lottery makes you happy?
Not really, if we believe the studies we have. The work of the most famous in the area have been conducted in the late 1970s by Philip Brickman. He compared the levels of happiness of a group “control” (witness) with those of a group of people who have won a maximum of a year and a half ago, between 50 000 and one million dollars in the lottery.
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To note, firstly, that the winners will not be claimed that they were not more happy than the others, and on the other hand, they had a tendency to, much less enjoy the simple pleasures of daily life that the other. To be jaded.
Here is the concept of”adaptation hedonic” comes into play. We give too much importance to often the positive impact of money on happiness, because that, conversely, we under-estimate completely our ability to adapt to our various acquisitions of, or increases in income. For the acquisition of a home, for example, studies show that after one year, the positive impact on the happiness is already gone! It is three months for a car.
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the winners are in the end not more happy than the other can also be explained by the disruption of social relationships, often caused by a fortune sudden. The risk is of losing his friends. However, studies show that the social life is among the items weighing the most on happiness, and more than money and consumption. Remember that the money is indeed happiness, but less than you imagine.