People who play the lottery with an income of less than $20,000 annually spent an average of $46 per month on lottery tickets. That comes out to more than $550 per year and it is nearly double the amount spent in any other income bracket.
Those who have the least spend an inordinate percentage of their income every year on lottery tickets (estimates vary from 4-9 percent). Yet while it is irrational for those in poverty to waste their limited resources on a one in 176 million chance, there is something almost rational in the reasoning for doing so. In 2012, The Atlantic’s Derek Thompson noted that,
For the desperately poor, lotteries perform a role not unlike the obverse of insurance. Rather than pay a small sum of money in exchange for the guarantee of protection that you’ll need in the future, you pay a small sum of money in exchange for the small probability that you’ll win money to help your lot right away. It is, for lack of a better term, a kind of aspirational insurance.
But what if the poor could pay a small sum to themselves (in the form of savings) and still reap the “aspirational insurance” benefits of the lottery? As the New York Times reports, some credit unions and non-profits are doing just that: