Every economics student learns that the lottery is a tax on people who cannot do arithmetic. It is a satisfying line, and it is wrong about the thing that matters. The people who buy tickets can do arithmetic. They are buying something the arithmetic does not price.
What they are buying is a week. From the moment of purchase until the draw, the ticket holder is entitled to a particular kind of daydream — the house, the resignation letter, the quiet settling of an old debt — and to hold it without embarrassment, because there is, after all, a ticket. The odds are irrelevant to the daydream. Two pounds for seven days of licensed imagining is not obviously a bad price.
The economics of permission
Seen this way, several puzzles dissolve. Why do sales rise when the jackpot rolls over, though the odds barely move? Because a bigger prize is a bigger daydream. Why do people buy in groups at work? Because the daydream is better shared. Why does nobody buy two tickets? Because the second one buys no more permission than the first.
None of this makes the lottery good policy. It remains regressive, and the state's enthusiasm for it is not to its credit. But if we want to understand why sensible people queue for it every Saturday, we should stop grading their sums and start asking what hope costs elsewhere, and why it is so scarce.
