Never Tell Me The Odds

Learning from the Powerball Experiment

In the beginning of 2016, the world saw what was perhaps the largest social psychological experiment of all time. It involved more than 635,000,000 participants and was conducted across 44 states, as well as Puerto Rico, the US Virgin Islands and Washington, DC, and its results gave researchers an astonishing look into why people do what they do outside of a laboratory setting. Yet, no academic journal reported on this study, which also was not conducted by a university-based research team. Indeed, the study was conducted nowhere in the world of academia, but instead in the world of gambling. I am here referring to the rules change regarding Powerball that went into effect in October 2015.

Before delving into the experiment, however, a quick rundown on how Powerball is played. Powerball is a basic lottery game where players select five numbers and a bonus sixth “powerball” number. At each drawing, five regular balls and the sixth powerball are drawn. If a player matches the five numbers plus the powerball on their ticket to those drawn, then she wins the jackpot. In cases when there is no winner, the jackpot rolls over to the next drawing. These rollovers are how the value of the Powerball jackpot grows — every time no one wins, the pot increases.

For years, the Multi-State Lottery Association, the organization that runs Powerball, held the odds of winning the jackpot at 175.2 million to 1. These slim odds produced an interesting effect: the larger the jackpot grew, the more players bought tickets, which in turn resulted in the jackpots growing ever larger. Eventually, however, that 1-in-175.2-million player would win and the jackpot would reset. In October 2015, however, the Multi-State Lottery Association decreased the odds of winning to 292.2 million to 1. Conventional wisdom would suggest that these decreased odds would drive players away. After all, the odds of being that 1 in 292.2 million are astronomically low. The opposite occurred.

By decreasing the odds of winning, the Multi-State Lottery Association in effect increased the size of the largest jackpots. These large jackpots in turn increased the number of people who were interested in buying a Powerball ticket. Prior to the 2015 rules change, the largest jackpot ever won was $590.5 million in May 2013. Since the rules change, Powerball jackpots have regularly exceeded that pervious amount — culminating in the January 13, 2016, jackpot of $1.586 billion dollars, the largest in Lotto history.

Above, I referred to the change in rules as an experiment. What I mean, specifically, is that this change gives psychologists a window into what motivates behavior in a highly ecological way that our laboratory studies often fail to replicate or capture. Paradoxically, lowering the odds of winning increases the number of people willing to play. Why? In short, because people do not care about the odds — they care about the prize money. The size of the prize is the primary motivator, even in spite of astronomically low odds of winning. The mere possibility of winning such a large amount is enough to get people to play.

The extent to which a study is ecologically valid is the extent to which the methods, materials, and setting mirror those of real life. Far too often, laboratory-based psychology research suffers from low ecological validity. Experiments like the one conducted by the Multi-State Lottery Association are powerful because they are highly ecologically valid: they are conducted with the entire population in question and in the real world, something lab settings can only approximate. Psychologists should not ignore studies such as this one, because such experiments can be used to supplement and direct laboratory research. Looking at similar moments, we can see psychological principles in action on a grander scale than any lab could ever hope to capture.

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J.D. Finkelstein

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