As it turns out, your taxes are helping those on fixed incomes to purchase lottery tickets. Not that this is surprising, but it is disappointing.

A study carried out in 2009 by Theos, a British think-tank, found that poor Britons spent a greater part of their income on lottery tickets, particularly scratch cards, than rich ones. In South Carolina, households with incomes of less than $40,000 a year account for 28% of the state’s population but more than half of its frequent lottery players.

More than one American in five thinks that buying lottery tickets constitutes a sound retirement plan, according to a Tax Foundation study. And research carried out by the Federal Reserve Bank of St Louis in seven American states found that much of the money spent on lottery tickets came from some form of government assistance (such as social security, unemployment or disability benefit).

How do we solve this problem?  Mandatory 10% tax that goes towards retirement?  That can’t work.  Should society just accept this is the general behavior of low-income homes and those on government assistance?  I can’t just shrug my shoulders and move on.

Economist via Nudge Blog

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categories: government, personal finance