Lottery is a competition based on chance in which numbered tickets are sold and prizes are awarded to those whose numbers are drawn at random. It is a common form of raising money for state and charitable projects. Some governments outlaw it, while others endorse it to the extent of regulating state or national lotteries.
The first recorded lotteries were held in the Low Countries in the 15th century to raise funds for town fortifications and to help the poor. The word lottery may come from Middle Dutch lotinge “to draw lots” or, as some scholars believe, from French loterie “the action of drawing lots” (perhaps a calque of the Old English verb lotte).
Although some people believe that winning the lottery is the best way to become wealthy, most studies have found that lottery participation leads to financial ruin for the majority of players. A survey by NORC indicated that 86 percent of respondents who had played the lottery in the previous year said they had lost more money than they had won. The study also found that the most expensive lottery tickets were purchased by low-income households.
The purchase of lottery tickets cannot be accounted for by decision models that maximize expected utility, because the ticket costs more than the expected prize. However, if non-monetary values such as entertainment or the fantasy of wealth are included in the utility function, then it may be rational for individuals to buy tickets.