tag:theconversation.com,2011:/us/topics/powerball-23940/articlesPowerball – The Conversation2022-11-04T12:35:22Ztag:theconversation.com,2011:article/1939212022-11-04T12:35:22Z2022-11-04T12:35:22ZHow winning record $2 billion Powerball jackpot could still lead to bankruptcy<figure><img src="https://images.theconversation.com/files/493380/original/file-20221103-13-rtnw5b.jpg?ixlib=rb-1.1.0&rect=98%2C134%2C8080%2C5309&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Got the winning ticket? </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/PowerballJackpot/472c058979164ec0823b9328b236fcb6/photo?Query=powerball&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1087&currentItemNo=1">AP Photo/Julio Cortez</a></span></figcaption></figure><p>Someone in Altadena, California, was the <a href="https://www.cnn.com/2022/11/08/us/powerball-lottery-record-delayed-drawing-tuesday-trnd/index.html">lucky winner of the largest Powerball jackpot</a> in history – or perhaps the unlucky winner? </p>
<p>Officials <a href="https://www.powerball.com/article/ticket-california-wins-world-record-204-billion-powerball-jackpot">revealed that the winning ticket</a> was purchased on Nov. 8, 2022, after the <a href="http://www.powerball.com/games/home">Powerball jackpot</a> swelled to <a href="https://www.cnn.com/2022/11/08/us/powerball-lottery-record-delayed-drawing-tuesday-trnd/index.html">US$2.04 billion</a>.</p>
<p>The prize was the largest lottery the world has ever seen, <a href="https://www.today.com/money/1-6-billion-powerball-california-couple-claims-winning-ticket-6-t100966">overtaking a $1.6 billion Powerball jackpot</a> in 2016 and <a href="https://www.cnn.com/2018/10/24/us/mega-millions-drawing-wednesday/index.html">$1.54 billion Mega Millions in 2018</a>.</p>
<p>The <a href="http://powerball.com/#powerball-prizes-and-odds">odds of winning</a> the Powerball lottery are very small, <a href="https://www.cbsnews.com/news/powerball-jackpot-record-amount-19-billion-odds-of-winning/">about 1 in 292 million</a>. You are about <a href="https://www.cdc.gov/disasters/lightning/victimdata.html">300 times more likely to be hit by lightning</a>. If <a href="https://www.census.gov/quickfacts/fact/table/US/PST045217">every adult</a> in the U.S. purchased just one ticket, each with a different number, there would still be a good chance – about 11% – that no winner would emerge at a given drawing and the pot would continue to grow even larger.</p>
<p>But once a lottery winner is declared and claims the prize, a more interesting question arises: What happens to all that money and the supposedly lucky ticket holder? As <a href="http://doi.org/10.1007/s10834-012-9299-y">research by me</a> and others shows, it’s often not what you’d expect. </p>
<figure class="align-center ">
<img alt="a bolt of lightning can be seen on the horizon in the clouds above the sea" src="https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">You’re 400 times more likely to be hit by a bolt of lightning than to win the Powerball.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/thunderstorm-over-sea-royalty-free-image/608978427?phrase=lightning">Jerry Kestel/EyeEm via Getty Images</a></span>
</figcaption>
</figure>
<h2>A smaller prize than it seems</h2>
<p>The first thing to bear in mind is that even when the jackpot is eye-wateringly large, the actual payout will be much less. </p>
<p>If someone comes forward with the winning ticket, they will not actually receive $2 billion in one big check. As a single winner, they can either choose a lump sum payment that amounts to about $929 million or receive $2 billion worth of annual payments that get progressively higher over <a href="http://www.megamillions.com/difference-between-cash-value-and-annuity">30 years</a>.</p>
<p>Also, the taxman gets to take a big bite. The federal government <a href="https://www.usamega.com/powerball/jackpot">will take</a> about $344 million, leaving $585 million if it’s a lump-sum payment. And then the state in which the winner resides will swallow a smaller portion if it has an income tax, as California does.</p>
<p>That jackpot is starting to look a lot smaller, though it’s still a massive chunk of change. </p>
<h2>Where windfalls go</h2>
<p>The conventional wisdom is that winning the lottery will change your life. While that’s probably always true, research suggests that it’s not always going to change in the way you might hope. </p>
<p>Economists Guido Imbens and Bruce Sacerdote and statistician Donald Rubin <a href="https://doi.org/10.1257/aer.91.4.778">showed in a 2001 paper</a> that people tend to spend unexpected windfalls. A look at lottery winners approximately 10 years after they won found they saved just 16 cents of every dollar won. </p>
<p>In my own research, I found that average people in their 20s, 30s or 40s who were <a href="http://doi.org/10.1007/s10834-012-9299-y">given an inheritance or large financial gift</a> quickly lost half the money through spending or poor investments. </p>
<p>And other studies <a href="http://doi.org/10.1162/REST_a_00114">have found</a> that winning the lottery generally didn’t help financially distressed people escape their troubles and instead only postponed the inevitable bankruptcy. <a href="https://www.cnbc.com/2018/02/06/why-the-560-million-powerball-winner-wants-to-stay-unknown.html">One found</a> that one-third of lottery winners eventually go bankrupt. </p>
<h2>It’s not easy to blow it all</h2>
<p>So how exactly could a lottery winner blow through hundreds of millions of dollars so quickly? It’s not easy. </p>
<p>Demographic research on lottery players’ characteristics shows that <a href="http://link.springer.com/article/10.1007/s10899-010-9228-7">lottery playing peaks</a> when people are in their 30s and falls as people get older. And the average female in the U.S. <a href="https://www.cdc.gov/nchs/data/vsrr/VSRR10-508.pdf">lives to age 80.5 and the average male to 75.1</a>.</p>
<p>So that means if the winner is in her 30s, she would have about 45 years or so to spend the lump after-tax sum of, let’s say, $470 million. That means she would have to spend a bit over $10 million a year, or roughly $29,000 per day, to burn through it all – even more when you factor in interest accrued while it sits in the bank.</p>
<p>In addition, really blowing it all means the winner has no assets to show for it. If she uses the money to buy luxury homes, <a href="https://www.vulture.com/2018/10/banksy-says-that-painting-was-meant-to-be-totally-shredded.html">Banksy paintings</a> and Ferraris and Aston Martins, her net worth wouldn’t actually change and she’d be able to retire with her wealth intact – assuming the investments kept their value or rose. </p>
<p>Blowing through the money, which leads to bankruptcy and low savings rates, means the winner has nothing to show for her spending besides a good time, plus goodwill from friends and relatives who went along for the ride.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two white men in suits, ties and coats stand next to each other in New York in front of a tall building. One of them is pointing and looking up" src="https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=888&fit=crop&dpr=1 600w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=888&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=888&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1115&fit=crop&dpr=1 754w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1115&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1115&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Huntington Hartford, at left, next to Robert Moses, was born rich but died in bankruptcy.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RobertMoses/9cfd01d5e7384b53ab10381973ddf653/photo?Query=Huntington%20Hartford&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=14&currentItemNo=12">AP Photo</a></span>
</figcaption>
</figure>
<h2>Riches to rags</h2>
<p>And that’s basically what a man named Huntington Hartford did. </p>
<p>Hartford, who lived from 1911 to 2008, was the heir to <a href="https://www.groceteria.com/store/national-chains/ap/ap-history/">the Great Atlantic & Pacific Tea Co.</a> fortune. This company, which started just before the Civil War, is better known as the A&P supermarket chain. A&P was the first U.S. coast-to-coast food store, and from World War I to the 1960s, it was what <a href="https://www.walmart.com/">Walmart</a> is for today’s American shoppers. </p>
<p>Hartford inherited <a href="https://www.telegraph.co.uk/news/obituaries/1996555/Huntington-Hartford.html">approximately $90 million</a> when he was 12. <a href="http://businessmacroeconomics.com/">Adjusting for inflation</a> means he was given <a href="https://www.bls.gov/data/inflation_calculator.htm">about $1.6 billion</a> as a child, after taxes. Yet Huntington <a href="https://www.nytimes.com/2008/05/20/arts/design/20hartford.html">declared bankruptcy</a> in New York in 1992, approximately 70 years after being handed one of the largest fortunes in the world.</p>
<p>Hartford had the reverse Midas touch. He lost millions buying real estate, creating an art museum and sponsoring theaters and shows. He combined poor business skills with an exceptionally lavish lifestyle. After declaring bankruptcy, he lived as a recluse with a daughter in the Bahamas until he died. </p>
<h2>May the odds be ever in your favor</h2>
<p>Hartford’s life story, coupled with academic research, shows that coming into a windfall of cash doesn’t always have a happy ending. Squandering that money is easier than it seems. </p>
<p>If you like to pay the lottery, I wish you good luck. If you win, I wish you even more luck.</p>
<p>Nevertheless, one key lesson, whether you play or not, is that when you get a windfall or win the lottery, plan ahead and resist the all-too-human temptation to spend all the money.</p>
<p><em>This article was updated on Nov. 10, 2022, to reference the winner.</em></p><img src="https://counter.theconversation.com/content/193921/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Squandering all that money is easier than it seems.Jay L. Zagorsky, Clinical associate professor, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1057002018-10-25T20:30:52Z2018-10-25T20:30:52ZGot the winning lottery ticket? An economist explains what to do with all that money<p>A resident of South Carolina finally stepped forward to <a href="https://www.bostonglobe.com/news/nation/2019/03/04/anonymous-south-carolinian-claims-billion-mega-millions-jackpot/K9Gl2eJ73WrGo4AadBUbbP/story.html">claim the Mega Millions</a> jackpot from last October. Although the prize was worth around $1.5 billion, the winner – who wished to remain anonymous – chose the cash option, a one-time payment of $878 million. </p>
<p>This begs a question: What should you do if such a windfall falls into your lap, whether a jackpot, a large inheritance or huge profit from selling a business?</p>
<p>I have pondered this for years as an <a href="https://u.osu.edu/zagorsky.1/">economist researching personal finance issues</a>. I also ask my undergraduates every semester what they would do if they suddenly got $1 billion. The standard student response is to pay off their sizeable college debts and travel the world.</p>
<p>While <a href="https://nces.ed.gov/fastfacts/display.asp?id=76">college is expensive</a> and <a href="https://theconversation.com/why-googles-plan-to-blanket-wilderness-with-wi-fi-is-a-bad-idea-49632">traveling to exotic places</a> is fun, neither will use up much of a billion dollars. But yet somehow many people manage to win big and squander it quickly.</p>
<p>Here are a few tips based on research for how to handle an unexpected windfall. </p>
<h2>Finding self-control</h2>
<p>The urge to spend is a huge problem. </p>
<p>As I noted in a <a href="https://theconversation.com/how-winning-1-54-billion-in-mega-millions-could-still-lead-to-bankruptcy-105275">recent article</a>, people who come into large sums of money end up bankrupt. My own research found that the average person in their 20s, 30s and 40s who was given an inheritance or large financial gift <a href="http://link.springer.com/article/10.1007/s10834-012-9299-y">spent or lost</a> half the money relatively quickly. A <a href="https://doi.org/10.1162/REST_a_00114">2011 paper</a> found that people who won mid-sized prizes in the Florida lottery were more likely to file for bankruptcy than small lottery winners.</p>
<p>The data suggest it takes time and experience to radically adjust to a different lifestyle. Given these problems of self-control, my advice is simple. If you win the lottery, do not take the lump sum payment. In the case of the Mega Millions jackpot, that allowed a winner to receive $878 million immediately – before taxes.</p>
<p>Instead, <a href="http://nymag.com/intelligencer/2018/10/mega-millions-if-you-win-usd1-6-billion-dont-take-the-cash.html">take the option</a> to receive annual payments over 30 years, which is still an incredible amount of money each year. And if you happen to have issues with self-control and spend the entirety of your first and perhaps second payment on fancy homes and cars, you still have 28 or 29 years of additional payments – which get larger over time – to get your financial house in order. </p>
<p>If your windfall came by another means, such as inheritance, it’s still easy to handle a self-control problem. Many insurance companies and brokerage houses sell <a href="https://money.cnn.com/retirement/guide/annuities_immediate.moneymag/index.htm">annuities</a>, which operate just like that 30-year lottery payment option. </p>
<p>An immediate annuity is a simple contract. You give a certain amount of money to an insurance company and in return it gives you a periodic payment, which factors in <a href="http://businessmacroeconomics.com/">inflation</a>, for either a fixed term or for your entire life.</p>
<h2>You can buy happiness</h2>
<p>And so what’s the best way to spend that money? </p>
<p>Social science researcher <a href="https://www.ted.com/talks/michael_norton_how_to_buy_happiness?language=en">Michael Norton</a> has good news for lottery winners: You can <a href="http://science.sciencemag.org/content/319/5870/1687?casa_token=9BW-iQNeTuwAAAAA:1YaspHMeuTmhQUxZQLKrRqOyY6a8EGSgvbmYIxLl1-tsj2-Xo9J0aNguw2_fJ_LEprTkovSgYTVi4w">buy happiness by spending money</a>. Just not in the way you might think. </p>
<p>He found that the best way is not to spend money on yourself. Instead, spend it on other people by giving money to charity and provide small sums for helping others.</p>
<p>Norton suggests small gestures like buying other people coffee will make you happier. If you have a large windfall, walk into a coffee shop and pay for everyone who is in line. If you are out having a beer, treat the entire bar to a round. </p>
<p><a href="https://doi.org/10.1177/0963721413512503">His research suggests</a> this will make you happier.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/242364/original/file-20181025-71026-1ay6wti.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Vacations are one way to spend your winnings.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/young-couple-pose-holiday-selfie-on-670636513?src=MIQPj3GEwiUGEpZJ_jWvSw-1-25">Monkey Business Images/shutterstock.com</a></span>
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<h2>Dealing with loved ones</h2>
<p>But a trickier issue is how to deal with relatives and friends. Once you hit the jackpot, many people will likely come calling, even those you have not seen in years. Suddenly, you’re the dearest person they know.</p>
<p>My suggestion is to make your friends, family and other loved ones as happy as possible. And to do that, you could give them a share of your winnings – but research on money and happiness suggests not too much.</p>
<p>Psychologists Andrew Jebb, Louis Tay, Ed Diener and Shigehiro Oishi <a href="https://www.nature.com/articles/s41562-017-0277-0">studied</a> thousands of people around the world and found that having an income in North America of about $105,000 per year maximized happiness. Getting more didn’t make people happier. </p>
<p>Based on this research, if you are going to dole out cash to your friends and family, keep it to about $100,000 per year for each person. If you want to help people in your life for a long time, then buy them an annuity that pays $100,000 a year for the rest of their lives. </p>
<p>Giving them more may do more harm than good.</p><img src="https://counter.theconversation.com/content/105700/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A lucky South Carolinian came forward to claim the $1.5 billion Mega Millions jackpot. Academic research has some suggestions about what the winner should do next.Jay L. Zagorsky, Senior lecturer, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1052752018-10-19T18:57:36Z2018-10-19T18:57:36ZHow winning $1.54 billion in Mega Millions could still lead to bankruptcy<p>One winner <a href="https://www.cnn.com/2018/10/24/us/mega-millions-drawing-wednesday/index.html">finally emerged</a> for the US$1.537 billion Mega Millions jackpot. Research suggests the as-yet unidentified winner may not be so lucky. </p>
<p>The <a href="http://www.megamillions.com/">jackpot swelled</a> to that huge sum after the 25 drawings held since the end of July failed to yield a winner. That makes it the <a href="https://www.cnbc.com/2018/03/29/who-won-the-biggest-us-lottery-prizes-ever.html">second-largest lottery</a> grand prize the world has ever seen. The record came in 2016, when the rival Powerball game hit <a href="https://www.today.com/money/1-6-billion-powerball-california-couple-claims-winning-ticket-6-t100966">$1.6 billion</a>. The Mega Millions was earlier estimated at $1.6 billion as well, but came down after tickets were tallied.</p>
<p>The <a href="http://www.megamillions.com/how-to-play">odds of winning</a> are very small, or about 1 in 303 million. You are about <a href="https://news.nationalgeographic.com/news/2004/06/flash-facts-about-lightning/">400 times more likely to be hit by lightning</a>. If <a href="https://www.census.gov/quickfacts/fact/table/US/PST045217">every adult</a> in the U.S. purchased just one ticket, each with a different number, there would still be a good chance – about 7 percent – that no winner emerges at a given drawing and the pot would grow even larger.</p>
<p>But once a winner is declared and claims the prize, a more interesting question arises: What happens to all that money and the “lucky” ticket holder? As research by <a href="http://doi.org/10.1007/s10834-012-9299-y">myself</a> and others shows, it’s often not what you’d expect. </p>
<h2>A smaller prize than it seems</h2>
<p>The first thing to bear in mind is that while the jackpot is eye-wateringly large, the actual payout will be much less. </p>
<p>If someone claims it, the winner would not actually receive $1.537 billion in one big check the next day. As a single winner, he or she can either choose a lump sum payment that amounts to about $878 million or receive $1.537 billion worth of annual payments that get progressively higher over <a href="http://www.megamillions.com/difference-between-cash-value-and-annuity">30 years</a>. </p>
<p>After that, the taxman gets to take a big bite. If the winner comes from a state without a lottery tax like Florida or Texas and chooses a lump sum, the federal government <a href="https://www.usamega.com/mega-millions-jackpot.asp">will take</a> about $211 million of that, leaving $667 million. The winning ticket was reportedly bought in South Carolina, which would take 7 percent, leaving the holder with about $606 million.</p>
<p>That jackpot is starting to look a lot smaller, though it’s still a fair chunk of change. </p>
<h2>Where windfalls go</h2>
<p>The conventional wisdom is that winning the lottery will change your life. While that’s probably always true, research suggests not always in the way you might hope.</p>
<p>Economists Guido Imbens and Bruce Sacerdote and statistician Donald Rubin <a href="https://doi.org/10.1257/aer.91.4.778">showed in a 2001 paper</a> that people tend to spend unexpected windfalls. Looking at lottery winners approximately 10 years after winning showed they saved just 16 cents of every dollar won. </p>
<p>In my own research, I found that the average person in their 20s, 30s and 40s who was <a href="http://doi.org/10.1007/s10834-012-9299-y">given an inheritance or large financial gift</a> quickly lost half the money through spending or poor investments. </p>
<p>And other studies <a href="http://doi.org/10.1162/REST_a_00114">have found</a> that winning the lottery generally didn’t help financially distressed people escape their troubles and instead only postponed the inevitable bankruptcy. <a href="http://fortune.com/2016/01/15/powerball-lottery-winners/">One found</a> that a third of lottery winners go bankrupt. </p>
<h2>It’s not easy to blow it all</h2>
<p>So how exactly could a lottery winner blow through hundreds of millions of dollars so quickly? It’s not easy. </p>
<p>Demographic research on lottery players’ characteristics shows that <a href="http://link.springer.com/article/10.1007/s10899-010-9228-7">lottery playing peaks</a> when people are in the 30-39 age range and actually falls as people get older. And the average person in the U.S. <a href="http://www.usatoday.com/story/news/nation/2014/10/08/us-life-expectancy-hits-record-high/16874039/">lives to age 79</a>.</p>
<p>So that means, assuming the winner is in her 30s, she would have about 45 years or so to spend the lump after-tax sum of, let’s say, $900 million. That means she would have to spend a bit less than $20 million a year or roughly $55,000 per day to burn through it all – even more when you factor in interest accrued while it sits in the bank.</p>
<p>In addition, really blowing it all means the winner has no assets to show for it. If he uses the money to buy luxury homes, <a href="http://www.vulture.com/2018/10/banksy-says-that-painting-was-meant-to-be-totally-shredded.html">Banksy paintings</a> and Ferraris and Aston Martins, his net worth wouldn’t actually change and he’d be able to retire with his wealth intact – assuming the investments kept their value or rose. </p>
<p>Blowing through the money, which leads to bankruptcy and low savings rates, means the winner has nothing to show for his spending besides a good time. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=442&fit=crop&dpr=1 600w, https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=442&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=442&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=555&fit=crop&dpr=1 754w, https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=555&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/241460/original/file-20181019-105779-1or4m9b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=555&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Huntington Hartford inherited millions. He died with little to show for it.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Huntington_Hartford#/media/File:Huntington_Hartford.jpg">Diane Hartford/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Riches to rags</h2>
<p>And that’s basically what a man named Huntington Hartford did. </p>
<p>Hartford, who lived from 1911 to 2008, was the heir to <a href="http://www.groceteria.com/store/national-chains/ap/ap-history/">the Great Atlantic & Pacific Tea Company</a> fortune. This company, which started just before the Civil War, is better known as the A&P supermarket chain. A&P was the first U.S. coast-to-coast food store, and from World War I to the 1960s was what <a href="http://www.walmart.com/">Walmart</a> is for today’s American shoppers. </p>
<p>Hartford inherited <a href="http://www.telegraph.co.uk/news/obituaries/1996555/Huntington-Hartford.html">approximately $90 million</a> when he was 12. <a href="http://businessmacroeconomics.com/">Adjusting for inflation</a> means he was given over $1.3 billion as a child, after taxes. Yet Huntington <a href="https://www.nytimes.com/2008/05/20/arts/design/20hartford.html">declared bankruptcy</a> in New York in 1992, approximately 70 years after being handed one of the largest fortunes in the world. </p>
<p>Hartford had the reverse Midas touch. He lost millions buying real estate, creating an art museum and sponsoring theaters and shows. He combined poor business skills with an exceptionally lavish lifestyle. After declaring bankruptcy, he lived as a recluse with a daughter in the Bahamas until he died. </p>
<h2>May the odds be ever in your favor</h2>
<p>Hartford’s life story, coupled with academic research, shows that coming into a windfall of cash doesn’t always have a happy ending. Squandering that money is easier than it seems. </p>
<p>If you played and didn’t win, I wish you better luck next time. If you played and won, I wish you even more luck. </p>
<p>Nevertheless, one key lesson, whether you play or not, is that when you get a windfall or win the lottery, plan ahead and resist the all-too-human temptation to spend all the money.</p>
<p><em>This is an updated version of an <a href="https://theconversation.com/odds-are-1-5-billion-powerball-winner-will-end-up-bankrupt-52972">article originally published</a> on Jan. 12, 2016.</em></p><img src="https://counter.theconversation.com/content/105275/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The lottery’s jackpot has swelled to that eye-watering sum, but research suggests hopeful ticket holders should be careful what they wish for.Jay L. Zagorsky, Adjunct associate professor, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/531032016-01-13T18:35:42Z2016-01-13T18:35:42ZAre Powerball drawings and ‘Quick Pick’ numbers really random?<p>The math behind all the discussion of tonight’s Powerball drawing assumes true randomness – equal likelihood for each number to be chosen, both in the drawing itself and, crucially, in the process of assigning “Quick Picks” to ticket buyers who don’t wish to choose their own numbers.</p>
<p>Are those assumptions reasonable?</p>
<p>Imagine a bag filled with 10 red marbles and 20 blue marbles. Close your eyes, reach into the bag and pull out a marble. You might call your selection random, but more importantly, the choice of red or blue is not equally likely. </p>
<p>In the Powerball drawing, winning numbers are selected from two clear containers: one container has 69 white colored balls with each ball numbered in black ink with an integer from 1 to 69. The other container contains 26 red balls with each ball numbered in black ink with an integer from 1 to 26. </p>
<p>The balls are dropped into the respective containers and then mixed in the container by what appears to be air injected from the bottom of the container. The air is then turned off and a ball is raised from the bottom via a platform and then removed from the container. This procedure is repeated for the selection of each ball (five white and one red, the “Powerball”). Generally speaking, it seems reasonable that each ball is equally likely to be selected by this process.</p>
<p>It is possible – though it’s a stretch – that balls with printed numbers requiring more ink to delineate the number on the ball may weigh more due to the extra ink than balls requiring less ink. Coupled with gravity, this may be enough to keep those balls lower in the container and thus more likely to be picked by the platform. In short, the ball marked 68 may be more likely to be picked than the ball marked 1.</p>
<p>Luckily, this is a testable assumption. Studying the results from previous drawings would allow an assessment of whether each number is occurring with similar frequency. Without doing the statistical calculation and data collection, given the nature of this device for generating balls/numbers, it’s safe to assume that this process generates each number with equal probability.</p>
<p>Evaluating the “Quick Pick” numbers is more challenging. Without a machine to generate numbers with plastic balls, lottery machines nationwide have been generating numbers for ticket buyers in ways that may not give each number exactly equal chances of being chosen.</p>
<p>The potential problems come from the fact that computers are devices programmed by humans and so, almost paradoxically, they must be given a systematic method to choose random numbers. In computer programming terminology, this is often called generating a “pseudo random” number. </p>
<p>In this process, the computer may use some information, such as the computer’s real time clock with precision to a millisecond, at the time that a request for a lottery ticket was made, to trigger a process that draws five numbers and one powerball number. This beginning number is often called the “seed.” Other seeds may be created from different phenomena that presumably occur without reason or predictability. From those seeds, additional calculations generate numbers at rates that approximate randomness.</p>
<p>The randomness of these machines’ results can also be tested, but with more difficulty: it involves either buying large numbers of “Quick Pick” tickets or collecting ticket information from a large number of people. Analyzing the frequencies of the numbers that were generated would reveal the degree of randomness of the Quick Pick process.</p>
<p>Without these data, it can be illuminating to look at the number of Powerball tickets sold and the percentage of the 292,201,338 possible combinations that are covered by those tickets. These data strongly suggest that the Powerball computers are generating combinations with equal probability and thus at random.</p>
<p>In conclusion, it appears we have both mechanisms operating randomly and are free to compute the odds of winning, probability that there’s at least one winner, and, most importantly, our expected profits.</p><img src="https://counter.theconversation.com/content/53103/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeffrey Miecznikowski does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The math behind all the probabilities being discussed for tonight’s Powerball drawing assumes each number is equally likely to be chosen. Is that what really happens?Jeffrey Miecznikowski, Associate Professor, Department of Biostatistics, University at BuffaloLicensed as Creative Commons – attribution, no derivatives.