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Exploiting
Human Weakness
By Kate Burch
Full disclosure: I have never bought a lottery ticket; never gone
to Vegas or even a casino; never bet on a horse at Keeneland when I
have gone there to enjoy a day with friends or family. That sort
of risk-taking just does not appeal to me. It is true that people
from all walks of life and all income levels do engage in gambling, but
it is far more costly and risks far more devastating consequences for
those with lower incomes. Studies I have read indicate that the
poor are twice as likely to buy lottery tickets than those with greater
means.
Some character traits that keep many in poverty include impulsiveness,
risk-taking, and difficulty deferring gratification. (Risk-taking
and impulsiveness may also, it is true, be associated with great
success, as with some investors or an entrepreneur who risks all in the
service of developing and promoting a great idea.) These negative
traits motivate gambling for many. It has also been shown that
one motive for purchasing lottery tickets is the perception that it is
an equalizer: that a person with less income, less education, and less
ability has just as much chance of being a winner as a rich, educated
person.
Using games of chance or lotteries to raise money for good causes has a
long history. I was surprised to learn that the Jamestown
settlement was partly financed by lotteries held by the Virginia
Company of London, and that lotteries provided funding for public
works, colleges, and rebuilding after the Civil War. The modern
state-run lotteries, which usually provide some funding for education
and other public programs, are rightly seen as a tax on the poor.
Some defend them because they are voluntary, as opposed to coerced,
taxes. They are also exploitive, taking advantage of those with
get-rich-quick fantasies who have trouble saving or allocating their
money to more productive ends.
Nevada was the first state to legalize casinos and other forms of
gambling as a way to stimulate tourism. Other states have
followed, to the extent that the market is being saturated.
Privately-owned casinos, despite their being magnets for organized
crime, have at least provided jobs and large tax
revenues. Government-owned casinos are another
matter. I read that Chicago Mayor Rahm Emanuel, facing the urgent
need to come up with $1.1 billion this year to pay the public worker
and teacher pension bill, wants the Illinois legislature to authorize a
Chicago-owned casino whose revenues would exclusively fund the
pensions. This desperate move would put the taxpayers at a pretty
substantial risk, as the not-unlikely failure of that proposed casino
would put them on the hook.
There are some promising recent findings concerning ways to actually
use lotteries in pro-social ways to incentivize the poor to budget and
save. That is a subject to cover in more detail elsewhere.
For the state of Illinois, the biggest problem is the bleeding.
Stanching the flow will require very tough measures to rein in public
employees’ benefits and create incentives for business development,
such as taken by Gov. Scott Walker in Wisconsin. The alternative
may be that Chicago will become another Detroit.
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