stevestory
Posts: 13407
Joined: Oct. 2005
|
| Quote (Jkrebs @ Oct. 21 2018,13:33) | | Quote (stevestory @ Oct. 20 2018,15:49) | BarryMath:
| Quote | Saturday Fun: When the Lottery Bet Has a Positive Expected Value
October 20, 2018 Posted by Barry Arrington under Intelligent Design
No Comments
This is one of those very rare times when the lottery bet has a positive mathematical expected value. Expected value is calculated as: (Amount possibly won * probability of winning) minus (Amount of bet * probability of losing).
The probability of winning Mega Millions is 1 in 302,575,350. The next jackpot is $904 million (cash value of $1.6 billion annuity). The expected value is ($904,000,000 * 1/302,575,350) minus ($2.00 * .9999999999999999999) = $0.98.
This means on average in the long run, for every $2.00 ticket you buy, you would expect to win $2.98 if the jackpot were always $904 million. Of course, you still lose the whole $2.00 every time you lose, which is almost always. Still, on average, over the long run, the expected value is positive ($2.98 – $2.00 = $0.98).
In the long run, it is a good bet. Of course, the problem is there is no long run. You only have a single shot at it. To achieve the long run average expectation, you would have to play several hundred million times. |
he's not doing the math right. |
Hmmm. What's wrong with Barry's math. Is not the expected value for a ticket $0.98??? |
his analysis is missing a few terms. Taxes reduce the EV, and he's got no terms for winning a lower pot cuz multiple winners.
|
