Tell me lies, tell me sweet little lies

As we all know there are lies, damn lies, and then there are statistics. Or in my life, there are statistics, damn statistics and can you please stop with the damn statistics. The last thing I ever thought I would end up doing is working with statistics. That is because of my general lack of mathematical aptitude and the trauma of trying to pass a (not optional) statistics course in business school. But that’s before I discovered that statistics are as important as and as pervasive as the weather.

Speaking of the weather, one statistic that is trotted out regularly is the odds of being struck by lightning, as in “you have more chance of being struck by lightning than…insert thing that most people think ought to be more common …” These are the kind of statements made by people who have not been steeped in the world of statistics. Statistically speaking, your odds of being hit by lightning are governed by that essential truth of management consulting – ‘it depends’. If you are in the U.S., 1 in 1,000,000 of you will be hit by lightning in a given year if you base it on the number of reported deaths and injuries. If you factor in the number of non-reported deaths and injuries it is 1 in 775,000. And how do we know the number of unreported incidents you might ask? I could tell you but then I would have to kill you (and I probably wouldn’t report it). But I digress. If we look at the chances of being hit by lightning over a lifetime –let’s say 80 years – we’re talking 1 in 10,000. If we look at the odds of knowing someone who was affected by a lightning strike we’re talking 1 in 1000. However, the keepers of the lightning statistics are going to be completely annoyed that I have just skewed that ratio because if you didn’t already know that the cottage burned down because of lightning you do now. Anyhow, being struck by lightning doesn’t seem to be so rare now does it?

And that’s what makes people buy lottery tickets. We all know people (or people who know people) who have won some non-trivial amount of lottery jackpot. Non-trivial, of course, is a subjective measure. I once won $1,000 in an office pool that ended up netting me $50 once it was divided among the participants. Anyhow, the great advantage for the people who run lotteries is the complete lack of general understanding about how statistics work. The chance of winning the grand prize in major lottery is roughly 1 in 15 million to 1 in 28 million, depending on the lottery in question. Most people who have passed grade 3 math do understand the unlikelihood inherent in those odds. Where this goes sideways is the notion that if you simply buy enough tickets or make sure to buy a ticket every week for every draw you will somehow increase your odds of winning. I reluctantly inform you that this is not the case. That’s because every ticket you buy has exactly the same odds. This means that when you splurge and buy 10 tickets for the draw instead of one, you are buying 10 chances at a 1 in 13 million chance. I have now saved you $18, which if you invest in an interest bearing account at 3% per year, will be worth $21,687 in 20 years. Oops, gotta go – I think I just stepped on a poisonous lizard.

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