The Poor Gamble

ScienceDaily (July 24, 2008) — Although state lotteries, on average, return just 53 cents for every dollar spent on a ticket, people continue to pour money into them -- especially low-income people, who spend a larger percentage of their incomes on lottery tickets than do the wealthier segments of society.

A new Carnegie Mellon University study sheds light on the reasons why low-income lottery players eagerly invest in a product that provides poor returns.

In the study, published in the July issue of the Journal of Behavioral Decision Making, participants who were made to feel subjectively poor bought nearly twice as many lottery tickets as a comparison group that was made to feel subjectively more affluent. The Carnegie Mellon findings point to poverty's central role in people's decisions to buy lottery tickets. (Full story at sd)

Say what you want about the ethics of gambling, it's interesting that those who can least afford to play the lottery are the ones who make it profitable. My question would be: Do these people remain poor, in part, due to this type of irrational behavior when it comes to monetary decisions, or are they simply a victum of a broken socio-economic system?