Who wants to be a millionaire? Well, as it turns out, not as many people as in the past. It seems that inflation has caught up with people’s dreams and a million dollars is now just not enough. Instead, the question today should be “Who wants to be a billionaire?” at least if you’re playing the lottery. Lottery officials say that demand for the once popular Mega Millions game is down, that is, unless the jackpot reaches a billion dollars. That’s when demand really spikes. So, lottery officials have decided to game the system, changing ticket prices so that the size of the jackpot increases more quickly.
Starting in October, the price of a Mega Millions ticket will rise from the current $2 price to $5. For the Mega Millions faithful who play the game on a regular basis, that could come as a real shock, but lottery officials hope that the change will increase the popularity of the game on a broader level and that the Mega Millions faithful will continue to be loyal customers despite the price increase. While the change won’t create a billion dollar jackpot every draw, it will generate bigger jackpots more often, and that frequency is exactly what lottery officials believe is necessary to keep the game alive. Indeed, in a nation where research shows that people are only considered wealthy when they have $2.5 million, winning anything less than a billion is apparently no longer the dream it once was.
Discussion Questions:
1. How does the change in ticket prices for the Mega Millions game reflect broader changes in the U.S. economy? Consider economic growth and rising living standards as you respond to this question.
2. Discuss consumer psychology as it relates to the lottery. Why is lure of winning a billion dollars more captivating than a jackpot that while potentially slightly smaller, is still a significant amount of money? Can this situation be explained using framing effects?
Sources| WSJ: https://www.wsj.com/personal-finance/it-takes-a-billion-dollars-to-sell-a-lottery-ticket-51651527?st=ZQKZoa; CNN:https://www.cnn.com/2024/10/08/business/mega-millions-ticket-price/index.html; CNBC: https://www.cnbc.com/2024/10/09/mega-millions-raising-ticket-prices-promising-bigger-payouts.html#:~:text=The%20price%20of%20a%20ticket,consortium%20that%20runs%20the%20lottery; Unsplash: Photo by dylan nolte on Unsplash