The real odds for winning the lottery

You may have seen the discussion about the general low level of "financial literacy" in the recent past.

In the long term - and its two opposing evil, "financial illiteracy" - used to describe the extent to which people understand the practical issues of their economic life.

In a broader sense, in terms of "account" and innumeracy "is used to describe the extent to which people understand the numbers in general, including probability and statistics matter.

Well, it turns out that many people in public places such as Canada, the United States and United Kingdom believe that they should do something to help his people to stand and counters.

It is difficult to argue with the need to improve education in mathematics and finance, where the population has a savings rate near zero, and debt to disposable income to 140 percent, was a house with the help of the shares at the current fuel consumption, but also currently spends more money on lottery tickets than on reading materials.

I know what you think. Just cotton-pickin 'minute! Is not the government, which are Decrying our weak understanding of the very same people that run the lottery?

Um, yes, it is them. It is clear that your Government would like to improve the financial literacy, while enjoying a piece of your gaming action. Ah, public policy! It is just so darn difficult to get all this in philosophical alignment.

Lotteries, often used as examples of financial illiteracy, innumeracy, or because he realized for the general probabilities, which are based on the game.

Take the venerable crowd favorite, in Lotto 6-49. The rules are very simple and accessible. Each ticket is divided into six figures. If your ticket numbers match the six numbers, which are collected in a draw, you will receive or share the main prize, and you could be financially set for life.

Chances of winning are clearly published, the process is very transparent, and everybody understands that this is a long shot. So to understand?

The problem is numbers. Most of us, as it turns out, is rather inept at intuitive understanding of very large quantities. Small numbers of a piece of cake, because we can conceptualize them against our ten fingers. The numbers in the hundreds or thousands of works because we can see and understand, say, two hundred pennies in a coin bank, 18000, or people in the NHL scene. But tens of millions? Fuhgeddaboudit.

For the most part, we conceptualize the meaning of a large number do not think about the number of individual units, but with the help of comparative costs. So, perhaps we could think of a million dollars in a very reasonable price for the house, because the majority of homes costing more than (Vancouver).

Or perhaps we think of the millions of dollars as a ridiculous price for a house, because the same amount to buy two very NICE house for $ 500,000 each (everywhere).

Perhaps we try to determine the size of hedge-fund manager George Soros' personal income in 2008 (1.1 billion U.S. dollars), noting that it is not even half the income hedge-fund manager James Simons ($ 2.5 billion ) - or that it was more handily than the GDP British Virgin Islands ($ 840 million). In other words, we try and meaning of large numbers by weighing them on a relative scale.

We can digest a large number of participating in the probability of winning the Lotto 6-49 in the same way. The nice people at the lottery to assure us that the probability that any given number will be drawn is one of the 13983816. To state that the same statistics in a different way, any number can be expected to win the 0.000007 percent of the time.

Therefore, the next time you buy a lottery ticket 6-49, you can be 99.999993 percent sure that you do not win the big jackpot. Now, go ahead and compare that to your belief, well, almost nothing. (For example, on the basis of the latest Transport Canada statistics, on average, you are more than four times more likely than dying in a car ... and now.)

Talk about buying with confidence! There may be another product, which you can be so certain. You are almost guaranteed not to win. In fact, you can also just break your lottery ticket right before the nose of a clerk who sold it to you, and cavalierly wagers on the note in the shopping cart. Why? Perhaps because, as your government, you certainly take it - but you love the invisible discretionary tax!