We in California are holding a primary election today to choose, among other things, our candidates for governor and other offices. One of the Democratic candidates for governor, Steve Westley, has stated that he has a plan to increase funds available for public education. His plan? Decrease the percentage of lottery ticket sales paid out to the winners of the various lottery games and instead give the "saved" money to public education. Brilliant.
The California lottery pays out about half the ticket money to the winners. This makes the lottery a poor bet compared with betting at the Indian casinos, and a very poor bet compared with betting in a Nevada casino. Reducing this pay out will make betting on the California lottery an even worse bet. Westley apparently believes that people will continue buying just as many lottery tickets even if the bet goes from poor to worse. They won't. A 50% pay out is already too low to maximize the revenue available to the government. Lowering it will inevitably end up reducing the money available. To increase the money available, the lottery should pay out more, not less.
I don't believe Westley is really so economically illiterate as to believe this plan will actually work as he claims. He must know better. At least I hope he knows better. But the average voter either doesn't know it, or hasn't thought about it, or doesn't even know what this plan is. I discussed the matter with a clerk in a farm hardware store, and he seemed to think it would work. If his lack of basic economic understanding is typical, there is no downside for politicians who say such thoroughly stupid things.
The lottery pay out percentage is somewhat similar to the income tax rates, except we have much less choice about paying income taxes. The lottery is a voluntary program. If people come to see the pay out as too low, they will purchase fewer lottery tickets. If the pay out is reduced to even less than half, ticket sales will decrease more than enough to counteract the increase in the state's take per ticket, and Westley's "pro-education" plan will end up hurting public education. Of course, given the dismal state of public education in California today, that might not be such a bad thing. Perhaps Westley learned his economics in public school...
Back to my home place.