## Tuesday, October 30, 2007

### Lotteries are stupid just like voting

The argument goes that lotteries are stupid because you have a very low chance of winning. So low in fact that you are more likely to die before you win then to win.

This argument is weird because we are encouraged to do more difficult tasks where we are even less likely to affect the outcome. Voting in an election takes more effort and time then buying a lottery but your vote virtually never decides an election.

There has been one case of a single vote deciding the election of an Irish TD. In the 2002 Irish general election, Dan Neville won a seat in the parliament by just one vote. There have been an average of more then 150 td’s in Ireland in its 27 elections. Each TD represents at most 30,000 people but say 25,000. So 27 elections of 25,000 people is one out of 101,250,000 total votes decided an election. You might argue “But if no one voted there would be no point having an election?” Well if no one bought a lottery ticket the lottery would not keep running for long either.

So the chance of your vote being the deciding factor in an election is less then your chance of winning the euromillions lottery.

## Tuesday, October 23, 2007

### How to pick good lottery numbers

There are three decisions that are used in deciding the numbers used in my lottery site

1. What numbers are rarely chosen
-An analysis of past winning results as described in this paper
-A simpler method is described in "maximum entropy parallel computation and lotteries"

2. What types of patterns are rarely chosen
A number of patterns are known to be avoided
-Picking numbers with the same distance between them. For example picking numbers that are always separated by 6 numbers
-Trying To Be Random in Selecting Numbers for Lotto
-The statistics of smallest space in lottery tickets

4. What specific patterns are rarely chosen
-Hot hand and gamblers fallacy
-Does the behaviour of lottery players consist Gamblers Fallacy? Evidence from Taiwan Market. I cannot find a link for this paper currently
-There are some numbers that are known to be chosen commonly. Previously winning numbers, certain patterns with low Kolmogorov complexity.

By combining knowledge from the research listed I have produced a lottery betting program that improves your average return

I always wondered about fair trade. They take a product and pay above the market rate for it. This is done on the grounds that this extra cost improves the farmers standard of living and is thus beneficial to everyone because the buyer gets to feel like they are not exploiting poor third world farmers.

How much help to farmers get? Well they get about a third above the market rate.
“Fair Trade partners with cooperatives of subsistence farmers to ensure higher-than-market prices – they can usually guarantee cooperatives about \$1.26 per pound of beans – 28 cents higher than the commercial market price.”

When these beans are then sold the mark up for the conventional coffee seller is about 5 times the original cost. For the Fair trade coffee company it is about 4 times. So essentially making 5 times the market rate is classed as immoral whereas making 4 times is more ethical according to the fair trade advocates.

Now here is what annoys me. The same standards that apply to fair trade commodities are not applied to other commodities produced by third world farmers. For someone to lecture you on the morality of fair trade they should not consume any third world produce (that has not been extensively processed) that has more then a 4 times mark up.

Heroin has a 400 times mark up. I believe and look for evidence that cocaine and marijuana have similar “price gouging” levels of mark up. So next time someone lectures you on fair trade coffee ask them if they have ever taken drugs and what was the fair trade efforts they made in this purchase?

Obviously a dealer cannot start a fair trade smack den, my point is that drug users should consider the production of their drugs in the same way they might with any other product. Also anti-drug enforcers should realise the effect their actions have on causing the exploitation of third world farmers.

Strangely this is both a pro legalisation and anti legalisation argument. What would the consequences of having heroin available at one eightieth the cost be? Junkies would no longer have to steal for heroin as it would be so cheap. But given the rules of supply and demand the use of heroin would soar.

## Thursday, October 18, 2007

### Intelligent Picks of Lottery Tickets

When humans pick lottery numbers they tend to make certain mistakes
• Pick low numbers like birth dates. By Benford’s law most significant numbers in your life will be low valued (house numbers etc)
• Not picking two consecutive numbers. Consecutive numbers “look” non-random so people do not pick consecutive numbers.
• Hot hand and gamblers fallacy. They believe little plastic balls have memory.
• Other odd beliefs based on picking “shapes” dates and sports scores.
• Not picking numbers on the side of a ticket.

By analyzing how many people win when certain numbers come up you can tell how many people pick a certain number. I have done this for the Euromillions lottery and the result is here

The average return on the lottery is 50%. Bookies give about 85% and stocks on shares have an average return of greater then 100%. Non jackpot winnings are 30%. Using shunned numbers brings this value up to over 50% in our tests. This is because when you do win you share your winnings with less people. If jackpots increase by the same percentage this would bring up the average return to around 75%. The jackpot figures are estimates because jackpots are such rare events as to make calculations using them dubious.

## Wednesday, October 17, 2007

### Good Night and Good Luck

"After I shut the door and started back to the living room, he yelled something at me, but I couldn't exactly hear him. I'm pretty sure he yelled "Good luck!" at me. I hope not. I hope to hell not. I'd never yell "Good luck!" at anybody. It sounds terrible, when you think about it." The catcher in the Rye

I have stopped wishing people “good luck”. Luck does not exist and claiming it does is irrational. People who are what we think of as lucky are just more observant and open to new things. So instead of "Good luck" you really are just wishing for them "Be observant and open to new experiences".