For marketers, these and other low-stakes games of chance are goldmines: Consumers buy in time and again even though the odds of winning anything meaningful are horrendous.
Kelly Goldsmith, an assistant professor of marketing at Northwestern’s Kellogg School of Management has been studying how and why consumers love taking chances on games they’re seriously unlikely to win. One reason why: People are far more optimistic than they should be, especially when it comes to low-stakes gambling. When a would-be gambler considers putting down serious money on a game of chance, he’s likely to pause and think hard to figure the odds of winning. But, when taking a chance only costs a dollar or two, people have a tendency not to think about the true odds of winning, and when they do they tend to think their odds of winning are better than they are in reality. The odds of hitting the lottery …
“are far less than being hit by lightning or being eaten by sharks,” Goldsmith says with a laugh. “But, a lottery ticket? It’s low stakes—‘only a dollar’—and it seems kind of fun.”
It’s fun, and it’s only a buck, we think—and that’s why we play. This line of thinking also contributes to increasing the likelihood that we’ll swing by McDonald’s or pick up a bottle of Coke at the convenience store, hoping on some innate level that we’ll win at one of their promotional games. The thinking is: Somebody has to win, right? And I’m sorta hungry/thirsty anyway.
To fight off this line of thinking and its wasteful-spending consequences, there’s a simple solution. Goldsmith says that when people pause and truly do the math on the odds of winning, they’re far less likely to want to play:
“We found, even with this very simple experiment, that if you ask people to sit down and think about their likelihood of getting the higher-value incentive—if you force people buying a lottery ticket to respond to ‘what’s your real likelihood of winning?’—their interest in getting the lottery ticket plummets,” Goldsmith says.
So before thinking “It’s only a dollar,” think harder about the likelihood of wasting that dollar—and hundreds and thousands more if you play the lottery regularly.