What is Lottery?
Lottery is a procedure for distributing something (usually money or prizes) among a group of people, by lot. The term is also used for any system in which a consideration (such as work or property) is given away by a random process.
In the modern sense of the word, the first European public lotteries awarding money prizes appeared in 15th-century Burgundy and Flanders as towns attempted to raise funds for town fortifications and aiding the poor. These early lotteries were not, as often portrayed, games of chance or skill, but were rather a painless form of taxation.
Many people purchase lottery tickets in the hopes of winning a large sum of money. While this may be true for some, purchasing a lottery ticket can often be more expensive than the prize amount. As such, lottery purchases cannot be accounted for by decision models based on expected value maximization. However, more general models based on utility functions defined on things other than lottery outcomes can account for lottery purchase.
Lottery play is very common in the 21st through 60th percentiles of income distribution, where individuals spend a significant percentage of their discretionary income on tickets. This can have serious consequences on financial health, especially for those in the very poorest quintiles of income distribution. These individuals, who tend to have a few dollars left over from their paychecks after paying all the bills, could instead be using this money to build an emergency fund or pay down credit card debt.