Walmart Logic
One of Walmart’s common themes is that you save money by spending money. So if you buy a $15 item for $10 then you have “saved” $5, not spent $10.
Apparently this inverted logic works well in other areas as well.
Sweet Dreams in Hard Times Add to Lottery Sales
“When people view themselves as doing worse financially, then that motivates them to purchase lottery tickets,” said Emily Haisley, a postdoctoral associate at the Yale School of Management who in July published a research paper on lotteries in The Journal of Behavioral Decision Making. “People look to the lottery to get back to where they were financially.”
…
“The findings were that in slump periods, lotteries historically have gotten a little bump upward,” said Professor Mikesell, who has not analyzed recent lottery data. “It’s taking a shot at getting some relief in hard times. It’s usually not a good gamble, but it’s a dollar, and if they happen to accidentally hit it, it may well change their lives.”
Lotteries are the worst possible way to spend one’s money. The chances of winning enough to “change their lives” is infinitesimal, usually about 1 in 100,000,000. Furthermore studies have found that those who do win big tend to burn through it quickly and after a few years are back where they started. Many say that winning was the worst thing that ever happened to them.
Both these activities (shopping and gambling) depend upon people’s poor understanding of economics, statistics and money management. It is a sad commentary on the state of US education that a firm like Walmart can prosper by taking advantage of people’s ignorance.
This is not just a byproduct of Walmart’s business model, their actions show time and again their utter contempt and disdain for their customers. Poor quality, limited low prices, surly staff and an unpleasant shopping environment are proof enough.
Walmart isn’t alone, of course, the country is infected with a feeling of “get yours before someone else does” or “every man for himself”. The fact that the states started to offer lotteries in the first place showed the shift from the belief that government should protect people from folly to one where government becomes a promoter of anti-social behavior.
To top it off, the money that was supposed to go to education from the lotteries hasn’t delivered as advertised. As the lottery revenue went up, states cut back on regular education spending so there was no long-term net gain in education spending. What really happened is that the poor paid a hidden tax (the 50% of the lottery revenue that the state keeps) while the wealthy pushed to have taxes on unearned income and inherited wealth reduced.
The Walton’s support for school vouchers is part of this trend. Instead of the public funding public education, vouchers allow taxes to be used to subsidize private education. The vast majority of the public dislikes the idea of school vouchers, but the Walton’s use their wealth to promote it anyway.
First, I saw an appalling statistic about the lottery a month or so back. I can’t find it now, but if I recall, it found that the lowest income group measured spent between four and five percent of its income on lottery tickets. They actually had it in dollar figures, but I used the percentage because it stood out to me. While I wouldn’t call this a tax (unless its a tax on stupidity), I agree with you that state lotteries are bad, and, quite possibly even unethical.
I won’t go into your erroneous take on Wal-Mart’s message. There is a string of posts on that topic already.
>”Furthermore studies have found that those who do win big tend to burn through it quickly and after a few years are back where they started.”
Wow. I guess this says a lot about the mindset of the person who won the lotto in the first place.
I mean, seriously, if you’re downtrodden to begin with and you’re wasting money on the lottery, it’s no surprise that you’d end up burning through the winnings…
“Stupid Tax”… yup.
1) Money is like water. If I dump 100,000 gallons in the middle of a tiny trickle of a stream, I do not get a lake; in a day or two the mass of water will have flowed away, the stream will be back to its tiny trickle. But if I put in a dam, then a lake will form whether a tiny stream or a mighty river is behind the dam. Restrict the outflow to less than the inflow: This is the key to making lakes and fortunes.
2) This is “The Writing On The Wal,” the “The Writing On Consumption Culture Generally.” Forget Wal-Mart’s $10 on something you genuinely might have bought anyway, a lot of advertising focuses on what you “save” by buying, from cars insurance to cars. Attack your opponent’s weaknesses, not his samenesses.
One of the most insightful books I read when I was first getting interested in social issues was “Tally’s Corner”.
Here’s the google entry on it:
Book Entry
One of the observations was that people who had little in life and didn’t expect to move upward tended not to save or plan for the future. A sudden windfall was spent quickly (including giving some of it away). The conjecture on why this is so is because even saving wouldn’t do much for changing the person’s status, while spending at least provided some momentary pleasure.
This doesn’t explain those who burn through huge lottery winnings. For example, the first mistake people make is to take a lump sum instead of the 20 year payout. They only get about half the money and have to pay another 28% in income taxes.
They are then faced with figuring out how to invest what is left. As I said originally, this can all be traced back to poor financial education in schools.
Of course if people were better educated they wouldn’t get into other traps such as second mortgages and usurious credit card debit.