July 25, 2008 / 3:08 PM / 10 years ago

Feeling poor spurs lottery ticket purchases

NEW YORK (Reuters Life!) - When it comes to purchasing lottery tickets, making people feel poor will prompt them to spend more money on a chance to become rich, American researchers said.

They found that people who were convinced they were earning a low salary bought nearly twice as many lottery tickets compared to others who were made to feel more affluent.

“When people are made to feel subjectively poor, they end up buying more lottery tickets which is somewhat perverse since every time you buy a lottery ticket, it’s the equivalent of burning money,” said George Loewenstein, a professor at Carnegie Mellon University in Pittsburgh, Pennsylvania who advised the research team.

“It’s certainly paradoxical that making people feel poor means they are more likely to burn money,” he added in an interview.

In a study published in the Journal of Behavioral Decision Making the researchers found that when people thought their earnings were below a certain standard, they were more prone to take risks and fall into a poverty trap.

“Lottery tickets are such a bad financial decision. Purchasing the tickets just makes their financial situation worse, which then encourages them to purchase more lottery tickets,” Emily Haisley, who headed the research team, explained.

In the study people earning less than $100,000 a year, which was suggested by the researchers to be a low-income, bought 1.27 lottery tickets compared to 0.67 by people who earned more.

In a second experiment in the study, some people were indirectly reminded that everyone has an equal chance of winning the lottery. The group given the reminder purchased 1.31 tickets, compared with 0.54 in the group not given the reminder.

“People who run lotteries have a lot of knowledge. They know who buys what types of tickets, they know who their customers are and their advertising certainly plays on the hopes and aspirations of low-income individuals,” Loewenstein said.

A recent report by the Commission on Thrift, a project of the private, non-profit think tank Institute for American Values, said that U.S. households with incomes under $12,400 spend an average of $645 on lotteries.

Reporting by Ashleigh Patterson; editing by Patricia Reaney

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