Office Lottery Pool

I participate in the office lottery pool. I know better. I work in analytics and I understand statistics. Lotto max consists of 7 numbers each of which can be 1-49. This leaves some 85 million possible combinations. However, they say because you have three chances to play the odds are 1 in 26 million.

That is bad statistics.

I know that but I still play. Really because if my office ever won the pool and I didn’t play I would be crushed as my co-workers celebrated.  But it brings up an interesting topic.

Why are we so bad at statistics?

There is a case in the UK where a woman had a child die of SIDs, the chances of which are about 1 in 8,000.  Later she has another child die of the same condition.  At her trial a doctor testified the chances of having two children die of SIDs was 1 in 64,000,000.  Again, bad statistics.  We don’t know what causes sudden infant death.  It could be genetic, or it could be environmental.  We don’t know.  When they say the chances of your baby dying of SIDs is 1 in 8,000.

What they mean is for every 8,000 births one results in death from this syndrome. However if you meet the conditions, your chances could be much higher.  You may have 1 in 10 children die, it’s just that only 1 in 8000 of the general population actually do. Thankfully the woman was exonerated during her appeal, but imagine what an ordeal it was to first lose two children and then get tried for murder.

We continually run numbers in our heads.  We estimate chances, and studies show we are terrible at separating risk and emotion. This is why some charities such as breast cancer make huge money, but only affect a few people while other dangers such as heart disease, which is a leading killer of men and women, receive proportionally minute attention.

We also fear things that are flashy.  Terrorism is an example of a greatly exaggerated threat.  They are loud and flashy and spectacular but really, auto-accidents puts them to shame in terms of sheer body count. And you are much more likely to be killed by your dog than a shark, but sharks are flashy and scarey.

How good is your grasp of risk?

1. What’s more common in the United States, (a) suicide or (b) homicide?
2. What’s the more frequent cause of death in the United States, (a) pool drowning or (b) falling out of bed?
3. What are the top five causes of accidental death in America, following motor-vehicle accidents, and which is the biggest one?
4. Of the top two causes of nonaccidental death in America, (a) cancer and (b) heart disease, which kills more women?
5. What are the next three causes of nonaccidental death in the United States?
6. Which has killed more Americans, bird flu or mad cow disease?
7. How many Americans die from AIDS every year, (a) 12,995, (b) 129,950, or (c) 1,299,500?
8. How many Americans die from diabetes every year? (a) 72,820, (b) 728,200, or (c) 7,282,000?
9. Which kills more Americans, (a) appendicitis or (b) salmonella?
10. Which kills more Americans, (a) pregnancy and childbirth or (b) malnutrition?

Click here to see the answers on Psychology Today.

Back to the lottery, 1 in 85,000,000 is outside of our realm of understanding and everyday experience so we focus on the jackpot.  When it gets up to 50 million more people play. The more people play, the higher the chance you will need to share the pot, even though your chances of picking all 7 numbers remain the same.

There is also the small pots and near miss rules coming into effect.  Small pots are the free play and minor payouts like $5 and $10 dollars.  People win these and think, just one more number and the payout would have been larger. plus it puts money back in their pockets.  They remember the few wins, and ignore the many losses.

By just barely missing a big payout, say choosing 13, 24, 41 when numbers 12, 25, and 42 are picked will make players feel they were close.  In actuality they were no closer than if 1,2,and 3 where chosen.

The media also contributes to this by splashing the winning ticket buyer’s photo across media. They don’t show the millions of people who lost money, or even the 70% of winners who spend all their winnings in 5 years.

Still I will continue to play with the office, but I don’t buy on my own anymore.  This way I get the thrill of playing, don’t have to worry about being upset if other win and didn’t participate and there is a good chance the win would be modest and not radically change my lifestyle.