Powerball: The Difference Between Gambling and Investing
JANUARY 14, 2016
What was unusual about this Powerball drawing is that the NPV of an investment in a ticket was not far from break-even. I encouraged them to not only think about the NPV of the investment but also to look at the distribution of returns. We considered the question: Even if buying a Powerball ticket had a positive NPV, would it be a good investment? With such high odds of losing, does it even matter if the NPV is positive?