How Perceptions of Lower SES and Control Influence Lottery Ticket Purchases

Not Winning at Life? Play the Lottery!: How Perceptions of Lower SES and Control Influence Lottery Ticket Purchases

Abstract

“All you need is a dollar and a dream” is a catchy advertisement for the New York State Lottery.  This quote represents why the lottery is popular; all players have an equal chance of winning.  In contrast, who plays the lottery is not equal.  Individuals of low SES disproportionately play the lottery more than other classes.  The current research looks to examine what factors most influence lottery play, especially among the poor.  We hypothesize that participants will purchase the most lottery tickets after first being primed to feel “poor” through negative financial social comparison, and then playing an uncontrollable, or unwinnable rigged game.  Which will increase external locus of control.  These two factors, social comparison and perceived control, will work together and have the greatest influence on whether participants choose to purchase lottery tickets.  The results could help improve pathological gambling interventions by providing a better understanding of underlying triggers.

Not Winning at Life? Play the Lottery!: How Perceptions of Lower SES

and Control Influence Lottery Ticket Purchases

 “What would you do if you won the lottery?”  This question has been a fun conversation starter ever since the lottery was created.  The average person approaches the topic of winning the lottery like they approach the topic of time travel – as a fantasy, something that is intriguing to think about, but will most likely never happen.  Unfortunately, many people view the lottery as a viable option for improving quality of life.  These people believe that they have a better chance of improving their life through winning the lottery then they do by other, more feasible options, such as saving money.  This is a fallacy of logic.  But what causes this fallacy to happen, and what demographic is most affected by the lottery?

The current study aims to explore what reasons cause people to fall prey to the lottery pipedream, and what factors influence lottery ticket purchases.  The current research will also examine if people can be induced to purchase more lottery tickets depending on their current mental state.  To better understand the relationship between people and the lottery we will begin with a brief history of the lottery and then delve into the categories of: lottery ticket sales statistics, financial coping strategies, and the relationship between social comparison and lottery ticket purchases.

Lottery History

 The earliest consideration of a lottery, gambling, has been around since the 1600s.  During the formation of the 13 colonies, the states began instigating lotteries in order to encompass more people and generate revenue for the state.  But, the first modern government-run US lottery was established in Puerto Rico in 1934.  This was followed, decades later, by the New Hampshire lottery in 1964.  Then finally, instant lottery tickets, also known as Scratchers, were introduced in the 1970s and account for the majority of lottery ticket sales (California State Library, 2010).  With the introduction of Scratchers, revenue generated from the lottery has skyrocketed.

As of November 2018, lotteries have been established in 45 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands; the most recent U.S. state to legalize a lottery is Mississippi.  Ticket sales for the Mississippi Lottery are expected to begin in 2019 (Isidore, 2018).  All of this demonstrates not only how entrenched the lottery system has become within American culture, but also that the lottery is expanding and evolving.  Lottery ticket sales statistics provide a deeper look into how much is spent on the lottery, and who is doing the spending.

Lottery Ticket Sales Statistics

 The lottery has steadily evolved from its humble origins.  Recently lottery ticket sales are on the rise from $58.25 billion in 2009 to $80.55 billion in 2016.  In total, Americans spend more money on lottery tickets, than on any other form of entertainment (e.g. sports tickets, movies, music, ect) (NASLP, 2016).  Pathological gambling, which includes playing the lottery, has become a problem within the United States; it is most prevalent within those with low income and low education.  Also, 54% of lottery ticket sales are made by 5% of the population (Lorenz, 1990).  This means that those most often playing the lottery, who are more likely to be pathological gamblers, appear to be of low income and low education.

To push this issue further, households that make less than $10,000 a year, spend on average $597 a year on lottery tickets – roughly 5% of their yearly income.  Which, when looking at relative income, is the largest amount out of any other income bracket.  At the same time, individuals with less than a high school education spend $700 a year on lottery tickets (Clotfelter, Cook, Edell, & Moore, 1999).  Based on these statistics, the lottery appears to draw most of its players and wealth from individuals who are both of lower income and education level.  Because of this, it is important to begin looking into what factors might most influence these two populations to play the lottery.  Perhaps socioeconomic status (SES) is somehow linked to a specific type of locus of control, thereby influencing individuals to purchase more lottery tickets.

Financial Coping Strategies: SES and Control

 Caplan and Schooler (2007) examined the relationship between SES, control beliefs, and two coping styles (problem-focused vs. emotion-focused) in the context of financial stress.  Previous research indicates that low SES is linked to greater use of emotion-focused financial coping and less use of problem-focused financial coping.  An example of emotion focused financial coping would be imagining winning the lottery and playing the lottery.  This is because the lottery is not a viable option for solving financial issues, but instead is a money pit from which there is little to no financial gain.  While an example of problem-focused financial coping would be borrowing money or cutting expenses.  Both of these examples demonstrate an action that immediately helps relieve and solve financial burdens.

Caplan and Schooler wanted to explore if measures of perceived control might mediate the relationship between low SES and the use of emotion focused financial coping.  Perceived control can be measured by a person’s specific locus of control, being either internal or external.  An internal locus of control is when a person believes they are in direct control of their actions, fate, and life outcomes.  While and external locus of control is when a person believes that outside forces, or fate, is in control of their life.  Meaning, the person believes that they have little control over what happens to them and instead outside forces determine the events in their life.  The results of the study suggest that low SES may decrease one’s control beliefs, increasing their external locus of control.  Which in turn decreases the likelihood of using effective financial coping strategies (problem-focused), resulting in a double disadvantage (Caplan & Schooler, 2007).  This means that individuals of low SES feel like they have less control over their lives and in times of financial stress turn towards solutions like playing the lottery.  Playing the lottery doesn’t actually help the financial issue, and instead further exacerbates the financial problem creating a vicious cycle.  This study did not manipulate any variables to see what factors influence individuals of low SES to feel less control and thereby participate in emotion-focused coping.  Perhaps merely perceiving that one is financially less well to do compared to peers (perceived low SES) is enough to trigger lottery ticket purchases.

Social Comparison and Lottery Ticket Purchases

 Haisley, Mostafa, and Loewenstein (2008) examined how, when individuals of low SES engage in implicit social comparisons with higher income classes, their desire to play the lottery increases.  They found that participants were more likely to purchase lottery tickets after they had been primed to perceive that their own income was low relative to an implied bogus standard.  This may happen because the participants have a desire to “correct” their low-income status.  Haisley et al. argues that individuals consider whether they have low income based on social comparisons, therefore “low income” is a subjective judgment and not based purely on actual income.

 The lottery might also be seen as a way for low income individuals to “level the playing field.”  Participants purchased more lottery tickets after being told to consider situations in which rich or poor people receive advantages (Haisley et al. 2008).  This was used as a way to prime participants into viewing the lottery as an “equal-opportunity prospect.”  Haisley et al. argues that individuals of low SES may feel that they do not have the same opportunities as those with high SES.  Therefore, the lottery, which is a game of chance, levels the playing field; all people have an equal chance of winning the lottery.  This would make lotteries disproportionately attractive to low income individuals, since the may feel that they rarely get fair odds relative to upper income classes.  These results suggest that preference to purchase lottery tickets is not stable and may be influenced by the context surrounding the decision.  Also, perhaps not only individuals of low SES consider their status of “low income” based off of social comparisons, but maybe all economic classes can fall into the trap of perceiving their own income to be relatively low when compared to a subjective higher average.

Current Research

 It has been shown that that individuals of low SES disproportionately play the lottery more than other economic classes.  This is in part due to feeling like they have less control over their lives because of their low economic standing.  Also, it appears that individuals of low income subjectively determine their “poverty” based on relative social comparisons.  In both cases the lottery is seen as some ambiguous external force that provides equal opportunity for financial success.

The current research looks to combine elements from both these studies.  Based on these two studies it could be posited that participants, regardless of income, will purchase more lottery tickets when first primed with subjective negative financial social comparison, and are then exposed to a situation that is uncontrollable, heightening their external locus of control.  Since perceptions of wealth may be subjective and determined through social comparison, it is reasonable to suggest that almost any person could be made to feel “poor.”  This feeling of low SES will then trigger individuals to feel like they have less control over their lives, leading to more lottery ticket purchases to even the playing field between themselves and the subjective higher income.  Therefore, we hypothesize that participants will purchase the most lottery tickets after being exposed to both negative financial social comparison and an uncontrollable, or unwinnable game.

Method

Participants

 300 California State University, Long Beach (CSULB) students will be recruited through Sona.  Sona is a participant pool management system utilized by most universities.  The study will be open to all majors, and genders.  There will be no exclusionary criteria.  Participants will be compensated $5 for their participation in the study.  Part of the experimental design will involve if participants choose to purchase lottery tickets with their compensation.

Procedure

 Students will be able to sign up for the study on CSULB’s Sona system.  The study will appear to students under the name “Social Comparison and Gaming.”  This title will be slightly misleading so that students will not go into the study already thinking about the lottery system.  Students will then come into the lab on their chosen date and spend about 30 min completing all required experimental tasks.  When the students first arrive in the lab, they will be asked to sign a consent form detailing their rights as a participant.  Upon signing the form, the students will be led to individualized cubicle rooms to complete the rest of the tasks in isolation. 

 Students will begin the rest of the experimental tasks by first filling out a demographic questionnaire asking questions ranging from socioeconomic status (SES), to gender, and ethnicity.  The computer system will log SES information to be used later in the experiment.  The next presented item will be a questionnaire that determines locus of control.  This questionnaire will be presented as both a pre and posttest.  At this point the students will be sorted into either a control condition, or one of three experimental conditions.  The condition they are sorted into will determine the stimuli they are presented with.

 There will be two manipulations, or independent variables (IV) each with two levels.  The first IV will be a computer game that is either very easy to win or rigged to be unwinnable.  The rigged game will be used to alter locus of control to be more externally relevant.  The second IV will be whether the students experience social comparison through economic or SES comparison.  If the students are placed in the social comparison level, then their earlier reported SES will be compared to a bogus higher average.  This will cause the student to feel as if they are classified as lower SES, based on the bogus average.

The Control Condition (CC) will have no social comparison and no rigged game.  While, each experimental condition will contain at least one “negative” level of each independent variable.  The first Experimental Condition (EC1) will have both social comparison and the rigged game.  EC1 is the main condition under investigation.  The next two experimental conditions will be used to better evaluate whether the main condition of interest demonstrates a significant difference, and whether there is either a mediation or moderation between the 2 IVs.  Experimental Condition 2 (EC2) with have social comparison, but no rigged game.  While, Experimental Condition 3 (EC3) will have no social comparison and the rigged game.  Refer to Figure 1 for a visual representation of the study and all the conditions.

After the students have completed all the experimental tasks, they will again fill out the locus of control questionnaire.  This will help determine whether the rigged game altered locus of control to be more externally based, thereby improving the study’s construct validity.  After completion of the locus of control posttest, the students will be compensated $5.  The students will then be presented with an opportunity to purchase $1 Scratcher lottery tickets.  The amount of $1 Scratcher lottery tickets purchased after the experiment will be measured as the dependent variable.  The purchasing of lottery tickets marks the end of the study.  Therefore, the students will be debriefed following the opportunity to purchase lottery tickets.

Expected Results

It is predicted that participants within EC1 will purchase the most lottery tickets compared to all the other experimental conditions, and the Control Condition (see Figure 2).  This is because the participants were exposed to both negative financial social comparison and the rigged, unwinnable game.  The negative social comparison induces a feeling of lower SES, while the rigged game will increase external locus of control by decreasing control beliefs.  The combination of these two factors will produce the highest percentage of lottery ticket purchases throughout all conditions.

A secondary prediction is that the other two experimental conditions (EC2, EC3) will also demonstrate increased lottery ticket purchases compared to the Control Condition.  But both experimental conditions will not purchase more lottery tickets compared to EC1 (see Figure 2).

These results will demonstrate that multiple factors can influence lottery ticket purchases.  But, when multiple factors are combined, there is an even greater chance of lottery ticket purchases.

Discussion

 The current lottery system appears to generate the majority of its wealth from individuals of lower socioeconomic status.  Because of this, the lottery system may be impacting our country in ways not easily seen.  Therefore, it is important for more studies to be done to better understand how the lottery system impacts our country.  The results of this study would help pave the way to forming a more comprehensive understanding of what situations or mental dispositions are influencing individuals the most to purchase lottery tickets.

 If the results of the study demonstrate that individuals who experience negative financial social comparison purchase more lottery tickets, then it might mean that mental representations of wealth are more important than the actual amount of money a person has.  Purely thinking that one is comparatively “poorer” to the average may trigger individuals to feel less financially well to do and influence their reliance on the lottery.  This means that middle-class to upper-middle-class individuals could be induced to purchase more lottery tickets if they are primed to believe that the majority of people around them are financially more well to do.  Therefore, perhaps individuals of lower SES purchase more lottery tickets because of reminders that they are less financially secure compared to the average citizen.  They use the lottery system to “even the playing field,” because every person has the same chance of winning the lottery.

 All people have either an external or internal locus of control.  If the results of this study support the hypothesis, then individuals with higher external locus of control may play the lottery more.  This is because they feel less in control of their lives and view the lottery as a way to “make it big” through fate, or chance, instead of ability.  Also, the results might demonstrate that locus of control can be influenced by situational factors, meaning that people who generally have an internal locus of control could be induced to alter their locus of control based on their situation.  Perhaps being able to alter locus of control might be a way to protect the self from uncontrollable situations.

Most often, individuals of low SES also have an external locus of control.  This may be, because low SES triggers an external locus of control.  Therefore, low SES, or even perceived low SES might induce people to feel more “out-of-control” of their lives, doubling the chance that they will play the lottery.  This study could demonstrate that social comparison of SES and having an external locus of control work in tandem, causing an individual to purchase more lottery tickets than if experiencing either factor alone.

 This, and other studies like it, could help influence future governmental policy changes involving how the lottery is conducted and marketed, by determining the greatest risk factors associated with increased lottery play.  Plus, this study will help bring awareness to individuals struggling with the “dream” of winning the lottery and demonstrate how the lottery is biased to be most enticing to certain populations.

Limitations

This study only examines two factors that may be related to lottery ticket purchases.  But there may be many other factors not yet explored, and those factors may have different interactions and relationships with one another.  Also, the study only used college students that.  First off, generally individuals of higher education purchase fewer lottery tickets, therefore college students who are on their way to higher education may not be representative of the general population.  But, if results can be found within a demographic less likely to play the lottery, then perhaps the unrepresentative demographic will strengthen the theory behind the findings.

Lastly, mixed results have been found regarding lottery studies, suggesting that the factors influencing lottery participation may be very dependent on the type of lottery being played (Zhou et al., 2012).  For example, one study found that individuals with internal locus of control played more lotteries in which the player picks their own numbers (Sprott, Brumbaugh, & Miyazaki, 2001).  They suggest this might happen because individuals with internal locus of control feel like they have “control” over the game and are therefore able to influence the outcome of the lottery through their number picks (Sprott et al., 2001).  Therefore, factors contributing to lottery play might be limited to the specific type of lottery studied.

Future Directions

Future research could examine if linking lottery ticket sales to savings accounts is a viable option for combatting the “black hole” effect of the lottery.  This would mean that individuals of low SES would be punished less for playing the lottery, and the lottery could become more of a financial coping strategy.  Plus, the addition of a savings program would remind people how important it is to be financially responsible throughout life.  In short, the government could better regulate the lottery, so it does not become a “poverty trap” targeted at individuals of lower SES (Lorenz, 1990).

Another future direction could be to begin focusing on the factors that decrease the likelihood of purchasing lottery tickets, especially within individuals of lower SES.  Most research currently focuses only on what factors influence or increase lottery purchases, but it would be helpful to also determine the factors that decrease lottery ticket purchases.  Learning this could help with better treating compulsive or addictive gambling.

Lastly, in general, there needs to be more studies conducted on the lottery.  More studies would lead to a better understanding about the different types of lottery play, and what specific factors for each lottery type influence people to play.

References

• California State Library. (2010). II. History of gambling in the united states (Wayback Machine 1999-2018) Retrieved from https://web.archive.org/web/20100910083807/http://www.library.ca.gov/crb/97/03/Chapt2.html
• Caplan, L. J., & Schooler, C. (2007). Socioeconomic status and financial coping strategies: The mediating role of perceived control. Social Psychology Quarterly, 70(1), 43–58. doi:10.1177/019027250707000106
• Clotfelter, C. T., Cook, P. J., Edell, J. A., & Moore, M. (1999). State Lotteries at the turn of the century: Report to the national gambling impact study commission. Washington, D.C.: National Gambling Impact Study Commission. doi:10.3886/ICPSR02778.v2
• Haisley, E., Mostafa, R., & Loewenstein, G. (2008). Subjective relative income and lottery ticket purchases. Journal of Behavioral Decision Making, 21(3), 283–295. doi:10.1002/bdm.588
• Isidore, C. (2018, January). Who is buying powerball and mega millions tickets?. CNN Money. Retrieved from https://money.cnn.com/2018/01/06/news/powerball-mega-millions-who-buys/index.html
• Lorenz, V. C. (1990). State lotteries and compulsive gambling. Journal of Gambling Studies, 6(4), 383–396. doi:10.1007/BF01014592
• North American Association of State and Provincial Lotteries (2016). Sales of state lotteries in the united states from 2009 to 2016 (Statista 2018). Retrieved from https://www.statista.com/statistics/215265/sales-of-us-state-and-provincial-lotteries/
• Sprott, D. E., Brumbaugh, A. M., & Miyazaki, A. D. (2001). Motivation and ability as predictors of play behavior in state-sponsored lotteries: An empirical assessment of psychological control. Psychology & Marketing, 18(9), 973–983. doi:10.1002/mar.1038
• Zhou, K., Tang, H., Sun, Y., Huang, G.-H., Rao, L.-L., Liang, Z.-Y., & Li, S. (2012). Belief in luck or in skill: Which locks people into gambling? Journal of Gambling Studies, 28(3), 379–391. doi:10.1007/s10899-011-9263-z

$5 Compensation

Figure 1.  Projected experimental design.

Figure 2:  Expected Results.