Archive for the ‘Expected value’ Category

Powerball economics … and, oh yeah, about regressive taxes.

January 14, 2016

Last night’s Powerball payoff was $1.6 billion.

Even at Powerball’s ridiculous odds – 1 chance in 250 million of winning – that’s a good bet statistically, right?

Let’s go thru some math.

In econ-speak, the nominal expected value of the payoff is $1.6 divided by 250 million … about $6.

Since each PB ticket costs $2 … and $6 is way greater than $2 … that’s a good bet, right?

 

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As Mr. Miyagi would tell the Karate Kid: “Not so fast, Grasshopper”

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