For a few dollars, lottery players can win a life-changing sum of money. They can imagine themselves jumping up and down, clapping, fist-pumping, when they hit the jackpot. In fact, such fantasies are very real, according to a study on lottery winners by Eric Storch, a professor and vice chair in the Menninger department of psychiatry at Baylor College of Medicine. His research suggests that we often make judgments about how likely an event is based on how quickly or easily it comes to mind—an approach called the availability heuristic.
The big news in lottery history is that jackpots are now much more common, with five prizes topping $1 billion since 2021. This is partly due to chance, but rising interest rates are also at play. And the fact that people are buying tickets more than ever before, despite knowing that they’re almost certainly not going to win, is another factor driving jackpots.
When a winner does hit the jackpot, most choose to receive their prize as an annuity, which pays out annual payments over 30 years. This allows them to spread out their tax bill over the years. In other countries, however, such as France, Australia, Germany, Italy, New Zealand, and Liechtenstein, the jackpot is paid out in one lump sum, which can be invested. In those cases, the winner is subject to personal income tax—meaning that the lump sum payout is not as large.