QUESTION TYPE: Weaken
CONCLUSION: Economists are wrong to say that lottery tickets are a waste due to negative payoffs.
REASONING: You get less on average than you pay, when you buy lottery tickets. But you get less on average than you pay from insurance as well. Insurance is a good purchase.
ANALYSIS: The professor is implying that the chance of getting rich makes it worthwhile to buy some lottery tickets, just like the chance of avoiding disaster makes it worthwhile to buy insurance.
Both lottery tickets and insurance on unprofitable, on average. Some winners, mostly losers.
There’s a difference though. Most people fear loss more than they value gains. So maybe it’s worth losing money on insurance, but not worth losing money on lottery tickets.
- This doesn’t tell us that people shouldn’t spend money on lottery tickets.
- This helps the argument. Lotteries keep a smaller portion of your money than insurance does.
- This doesn’t tell us that it’s not worth taking risks on the lottery. We want to show the risks of the lottery aren’t worth it.
- The odds of winning don’t matter that much. I’d like to have a small chance of a $10,000,000 lottery payout. That would change my life.Getting $500 from insurance is nice, but not life changing.You can’t just look at the odds of winning. You must look at odds multiplied by what you get if you win.
- CORRECT. If this is true, then insurance is more valuable than the lottery. It might be worth losing money on insurance, but not worth losing money on the lottery.
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