The Indianapolis Star has a nice bit of reporting on the lottery. The short version: it’s played mainly by low-income individuals, the payout is something like 60%, and the benefits are distributed mainly upward along the socio-economic scale. One of the main mechanisms of this upward distribution is the fact that a lot of lottery money is distributed based on a formula associated with excise taxes — in other words, if you live in an area with more expensive boat and auto registrations, your area gets more lottery money.
This strikes at a fundamental precept in some political circles: that individuals make better spending decisions with their money than government would. The lottery phenomenon goes a long way toward demonstrating that this simply is not so in a great many cases. Leaving aside, for the moment, the issue of whether it is fair for the government to tax and take your money, the lottery is a miserable spending decision, and a lot of people make it — a lot of people, I would bet, who can be found protesting vigorously that another nickel in taxes would absolutely kill them. In effect, they are making a spending choice that they are better off with a shitty chance at riches than they are at having their sidewalks built or fixed or living in a neighborhood without lead in the soil or whatever.
I know I’m coming dangerously close (if I’m not already there) to throwing out the “everybody but me is stupid” political argument. But, it’s awfully frustrating to engage in political discourse where one fundamental premise is that the citizenry is informed and making rational decisions and then be confronted with the lottery as evidence that the foundation might be a bit shaky if not completely illusory.
Maybe lottery players are buying more than a crappy chance at a lot of money. Maybe they’re buying hopes and dreams which they lack on account of the daily heaping of abuse the world is delivering. (After all, I’ve been known to throw away money at the craps table — not because I view it as a good way to make money — but for the fun I have while playing.) But, somehow there has to be a better way of seeing their resources devoted to obtaining their aspirations.
And, maybe I’m just in a bit of a mood right now. I have visions of a guy bitching about the government while using his disability money to buy a pack of smokes and a lottery ticket.
Doug – i think your take on this story (and the story itself) is a bit misleading, and both deserve some additional information. First of all, when the auto excise tax became a hot political issue, members of the Indiana General Assembly made a conscious policy decision to cut the tax by about 50 percent — and funded that tax cut with lottery revenues. If the legislature wants to reconsider the funding source, then it will have to tread carefully, as they will need another funding source for the auto excise tax. It is true that the lottery is unfair as “poor” people disproportionately play it, and use up more of their income than other income classes. This has been aptly documented elsewhere. Its been called a voluntary tax (I call it a tax on stupidity) but lottery players cheerfully play (or pay) it every day. I myself play power ball to the tune of about $6 to 10 a week, and I am in an upper income class and not in a poor county. But I choose to pay/play. Voluntarily. That, to me is the genius of the lottery — govt has finally figured out a way to get/raise tax dollars cheerfully out of the general public.
Also, the argument of how the distribution of revenues is unfair does not ring true for me for two reasons. One, so much of our other government revenue seems to benefit poor counties (medicare/medicaid/corrections/social services) Just because the legislature funds a program with one funding source does not necessarily mean that the world is going to end. Poor counties and poor people benefit from other sources of revenue at greater proporations than do other income clases or wealthier counties.
Also, I buy most of my lottery tickets in downtown Indianapolis, but live in one of the doughnut counties — so I am not certain that there is any way of accurately measuring just where these revenues are originating from.
Bottom line: if the legislature wants to reconsider where lottery revenues go, then it should also be prepared to figure out where new funding will come from for auto excise tax, as that crisis will likely reignite all over again.
To me, this argument also points out just how dependent on gaming revenues our state govt has become. Every time there has been a budget or poltiical crisis in the last decade or so, we rely on lottery revenues, add a new river boat or racino, or sell new gaming licenses. (its a wonder that the Governor and legislators have so far avoided using gaming to bail them out of the current budget and cib mess, but that chapter has not been written yet.
Doug, this strikes at two fundamental precepts in politics:
1.) As you note, some individuals make “poor” spending decisions. I don’t think there was much doubt about that previously. In any case, the question remains: is it ethical and practical to use govt (vs. other means) to “help” people with those decisions?
2.) As you didn’t note, it is commonly assumed, in some circles, that govt can (and should) make better spending decisions than individuals. When you cite the govt’s redistribution of these resources to the relatively wealthy, why not question this fundamental assumption? To note, in a wide range of public policy issues, the govt is quite busy taking money and opportunities from “the common man” (including many of the poor and lower-middle income class) to give money and protection to interest groups (including many in the upper-middle class). It’d be nice to see more people questioning this specious assumption.