The Magic Economics of Gambling

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  • Published on: 30 October 2018
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    References:
    [1] https://www.statista.com/statistics/253416/global-gambling-market-gross-win/
    [2] http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_MET_2017.pdf
    [3] https://twitter.com/wendoverpro/status/1054533498722111488
    [4] https://www.nber.org/papers/w18237.pdf
    [5] https://twitter.com/wendoverpro/status/1054533837328281600
    [6] https://twitter.com/wendoverpro/status/1054534236642795522
    [7] http://www.its.caltech.edu/~snowberg/papers/Snowberg-Wolfers%20Risk%20Love%20or%20Decision%20Weights-NBER.pdf
    [8] http://www.football-data.co.uk/blog/favourite_longshot_bias_tennis.php
    [9] https://economix.blogs.nytimes.com/2010/06/02/the-bp-spill-and-the-favorite-longshot-bias/
    [10] https://ac-els-cdn-com.ezproxy1.library.usyd.edu.au/S0167268114002194/1-s2.0-S0167268114002194-main.pdf?_tid=6aac86b2-7e4a-46d0-bf4d-5ab70e8db750&acdnat=1540355242_b9bcf6d0549207112968a3467b39a9a0
    [11] https://www.hbs.edu/faculty/Publication%20Files/08-061_17c22e32-fe06-4b4a-8b5e-e09227fc8104.pdf
    [12] https://www.commissions.leg.state.mn.us/ladder/120511prizelinkedsavingsFAQs.pdf

    Animation by Josh Sherrington
    Sound by Graham Haerther (http://www.Haerther.net)
    Thumbnail by Simon Buckmaster

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    Alec Watson, Andrew J Thom, Braam Snyman, Bryan Yip, Chris Allen, Chris Barker, Connor J Smith, Daddy Donald, Etienne Dechamps, Eyal Matsliah, Hank Green, Harry Hendel, James Hughes, James McIntosh, John & Becki, Johnston, Keith Bopp, Kelly J Knight, Ken Lee, KyQuan, Phong, manoj kasyap govindaraju, Plinio Correa, Qui Le, Robin Pulkkinen, Sheldon Zhao, Simen Nerleir, Tim Robinson

    Music by http://epidemicsound.com

    Select footage courtesy the AP Archive
  • Runtime : 11:24
  • gambling magic economics econ money lottery casino roulette odds loss aversion utility function interesting explained explainer video essay wendover productions half as interesting animated educational

COMMENTS: 40

  • Krik
    Krik   6 days ago

    Best gambling qoutes on Instagram @gambling_circle

  • Prateek
    Prateek   1 weeks ago

    This video is filled with inaccuracies. Behavioral economics is difficult to grasp intuitively, but you made some pretty incorrect analogies there

  • Lewis Gray
    Lewis Gray   1 months ago

    200/1 odds returns 201 for each dollar not 300. 6:43

  • ХОРОШО
    ХОРОШО   1 months ago

    Casinos not just sell loses, it sells entertainment.

  • J L
    J L   1 months ago

    I didn't hear mention of entertainment being a motivation for patrons. I know I will lose money gambling but the thrill of winning has a value to consumers.

  • cormac23432342
    cormac23432342   1 months ago

    1$ at 200/1 does not return 300$. It returns 201$

  • Paul Page
    Paul Page   1 months ago

    Casino gambling and lotto are rigged games that always favors the house.

  • Tradin War Stories
    Tradin War Stories   1 months ago

    This is a stupid explanation of gambling hes leaving out so many factors juat by saying essentially you lose 94 cents for every dollar you play. Btw playing black or red is a suckers play on roulette. You play 3 numbers every spin they pay out like 38x

  • Pat
    Pat   1 months ago

    if you go see a movie you will loose the 10$ but get 2 hrs of entertainment. if you gamble 10$ you could win more, break even or loose all the 10$ all the while you are entertained and prob get a free drink.

  • Pat
    Pat   1 months ago

    just go and look at the quarterly Nevada gaming commission revenue per casino and games.

  • Cody'sLab
    Cody'sLab   1 months ago

    The only reason I have car insurance is I am legally required to have it for liability.

  • Magnusmaster
    Magnusmaster   1 months ago

    Now explain how people buy loot boxes in videogames when it's cheaper to buy a game without loot boxes and it's way more fun.

  • Mitchell Lerich
    Mitchell Lerich   1 months ago

    The reason people buy into low probability big wins is because most people that gamble can't afford too. Gambling feeds off the poor.

  • Keanu-sama
    Keanu-sama   2 months ago

    Except intrest is basically nothing

  • Shivansh Shukla
    Shivansh Shukla   2 months ago

    Doesn't the background music around 11:00 sounds like Arriving Somewhere But Not Here - Steven Wilson?

  • s.f.w.l
    s.f.w.l   2 months ago

    You want a big gamble with low risk? Buy bitcoin and don't touch them for 5 years, than sell them for a big profit!

  • JoeAceJR
    JoeAceJR   2 months ago

    Insurance should be optional.

  • Jon C
    Jon C   2 months ago

    The guaranteed $ can keep playing and winning infinite money, the non-guaranteed win, can lose and it's game over...

  • David Lloyd-Jones
    David Lloyd-Jones   2 months ago

    A 1:15 the video claims a fair 50-50 would let you leave with the money you came in with after infinite time. Wrong!With a finite stake playing on a fiar 50-50 proposition you will with certainty go broke. In finite time. You may be rich from time to time, but you will at some point hit zero -- at which point you're out of the game. The end.So much for Wendover's knowledge of "magic economics."

  • Alexandre Zajic
    Alexandre Zajic   2 months ago

    Insurance doesn't exist only because people have loss aversion. It's actually logical, if you grant that there's decreasing marginal utility of money. Spending that extra 3 cents on the dollar to make sure that an accident doesn't leave you in abject poverty is a huge win, because the marginal utility of the universe where your $100,000 accident coverage pays out and you avoid abject poverty is worth a lot more than the universe where you risked abject poverty for the long-run benefit of +$3,000. In other words, though it's negative EV in terms of money, it's positive EV in terms of utility.It's important that loss aversion and the decreasing marginal utility of money are kept as separate ideas. If people had a ton of money like banks themselves, then insurance would be illogical, as you say, and would only exist because of loss aversion. But it exists for a very logical reason, not just couched in human psychological biases.

  • Santiago Ruvira
    Santiago Ruvira   2 months ago

    Insurance works because people are risk-averse. To say that they economically shouldn't work is really ignorant

  • xMacieX
    xMacieX   2 months ago

    The 80% option doesn't only come with a "chance of loss", depending on the number of tries you are able to take for example 1 try you have 20% to loose everything and end up with 0$ instead. Even if you are unlcuky because of the nature of the probability there is a certain random factor involved and if you are unlucky this certainly happens because you can't ramp up the sample size to infinty when applying this to reality. So optiopns considering probability are not "woth the exact same". Only if you are able to run enough cycles you are able to achieve these results due to the law of large numbers. Since this doesn't usually apply for many ppl it is totally reasonable to pick the 100% chance chance choice over the other.

  • iceshadows911
    iceshadows911   2 months ago

    I think your study lead you to make a bad premise where the gambled $6.25 is equal to $5. Winning a prize happens only once, and cannot be averaged out over time and therefore it's obvious these two choices aren't equal. One is either $6.25 or $0 and the other is always $5.

  • Jacob Larsen
    Jacob Larsen   2 months ago

    If you can swing the advantage to you favor $100 bet with a 1% edge is worth $1 per bet and the longer you play the more you win it's that easy folks just gain the edge over the house and play a lot to win the same way the casino does

  • marek m
    marek m   2 months ago

    The horse racing gamble is wrong i think. With 2:1 odds you win $2 for every $1 you bet. So if you win, you get $2 plus your original $1 back...so $3. If you bet 200:1. If you win you get $200 plus your original $1... so $201, not $300. Come on guys, are you or are you not degenerate gamblers who should know this?

  • Sound Money
    Sound Money   2 months ago

    Fml hes right.. the moment i went from euro table to american i lost everything

  • infinitecanadian
    infinitecanadian   2 months ago

    Gambling is such a waste of time and money. I don't know why anyone would gamble.

  • Asbjørn Olsen
    Asbjørn Olsen   2 months ago

    Well, there is also the entertainment factor - people think gambling is fun, and maybe they're okay with paying for that through gambling.

  • eSwatini
    eSwatini   2 months ago

    Haven't watched the video but I'm going to assume that he puts planes into this somehow

  • Brandon Guerrero
    Brandon Guerrero   3 months ago

    Sometimes gambling is pure magic especially when you win good money.

  • Jack L
    Jack L   3 months ago

    Those polls only show that most people don't understand basic statistics

  • NightCrawller
    NightCrawller   3 months ago

    Did not understand the tennis example, if anyone can elaborate.