Lottery is a form of gambling wherein people try to win a prize by predicting the outcome of a draw of numbers. The game is popular across the United States and many other countries, and contributes billions in revenue annually. The odds of winning a lottery are very low, but some people still play for the hope of a better life. A new study sheds light on this phenomenon. It finds that when people make decisions, they tend to overweight small probabilities. This is known as counterfactual thinking and can explain why people continue to play the lottery, even when they know that the odds are poor.

Lotteries have a long history in human society. The casting of lots to determine fates and privileges has a biblical foundation, as does the practice of giving prizes in exchange for goods or services. Government-run lotteries were commonplace in colonial America, and they were the first state-run games to distribute public funds after the United States won independence.

While Americans grew to disfavor lotteries in the 1830s, they regained popularity during times of economic stress. The state governments that adopted lotteries argued that the proceeds would fund public services without burdening working-class families with onerous taxes. This strategy has worked remarkably well, but it also has produced another problem. As Clotfelter and Cook point out, lottery revenues have not correlated with the objective fiscal health of state governments.