The Key to Saving Is Gambling. Seriously.
Here’s a mystery for you: 66 million Americans have zero dollars saved for a rainy day — no financial reserves whatsoever — and 63 percent of us don’t have enough money saved to cover an unexpected $500 expense without resorting to a credit card or a pawn shop. At the same time, we spend $70 billion a year on lottery tickets, blow $120 billion gambling, and bet another $400 billion on sports events. The big mystery, which you’ve probably spotted, is why we seem to gamble our most precious — and often our last — dollars for a small chance to win big?
For a long time the academic community saw gambling as evidence of irrationality and a lack of financial sophistication. If we could just teach these people to think rationally, the logic went, they would behave differently and do the “right thing.” Ironically, the very rational idea that the world would be better off if we could just teach people to think rationally proved irrational.