On Gambling

I’ve always believed that gambling is a tax that's incident on those who’re bad at math. I’ve never seen the point of gambling, and I can’t understand why people get so excited about visiting casinos. I’d rather watch the dust collect on magazines at my dentist’s office, thank you very much.

So I was quite thrilled to find out that during the time I was in Chicago, Economists Greg Mankiw, Brad DeLong and Tyler Cohen were blogging about gambling. Brad was a Clinton appointee, Greg was the head of GWB’s council of economic advisors (until he was marginalized) and Tyler is a libertarian at GMU. I’ve always been struck by the sterling quality of argument and debate that these three seemingly different economists engage in.

Anyway, Greg started off with a post called “ Why I hate gambling.”

My view is that there are three kinds of gamblers, all of which sadden me.

First, there is the compulsive gambler. When I was growing up, the husband of one of my mother’s coworkers lost all their money in a fit of compulsive gambling. This occurred just as their teenage daughter was getting ready to apply to college. The college savings, as well as all their other savings, were gone. Watching this experience has most likely colored my view of the activity more broadly.

Second, there is the recreational gambler. He spends, say, $20 a week on slot machines or lottery tickets. Some say this is a fun diversion. But given the availability of books, movies, plays, museums, checkers, chess, etc., it is an unfortunate reflection on a person’s imagination when a scratch lottery ticket is the best diversion he can find. (I'll go easy on the person who plays small-stakes poker among friends, because the socializing is a much bigger part of the activity than is the gambling.)

Third, there is the professional gambler, such as the one in the Slate article (or the boyfriend of blogger Jacqueline Passey). In some ways, this case is the saddest of all. I have no doubt that some people can, in fact, make a living gambling. But doing so requires a lot of intelligence and savvy. It is a shame that someone with so much inherent ability wastes it doing something of such little social value.

None of this has much implication for public policy. The libertarian in me says people can waste their lives if they want. The utilitarian points out that governmental attempts to suppress gambling are likely to be fruitless and would foster a large underground economy. But the moralist still makes me sad when I observe the phenomenon.

Okay, I got that off my chest. The libertarian and utilitarian will now put the moralist back in his cage.

I tend to be particularly saddened by two & three i.e the recreational gambler and the gambler who thinks he/she can make a ton of money out of gambling.

Tyler then writes:

More than anything I am baffled by gambling; to me it would be as fun as paying to count pennies. I genuinely cannot understand the adrenalin rush but I don't enjoy driving really fast either. If I let out my moralist (who is more than ten percent, I might add), I would disapprove of people who are usually late, people who smoke cigars in restaurants, people who play loud music late at night, and people who are not curious. Call me a prude if you want, but might these people be, in some fundamental sense, partly evil? Seriously.

Unlike Tyler, I enjoy fast driving, but I just can't make sense of people who gamble. I'm also not a fan of people who play loud music at night and people who are not curious.

Brad Observes:

On the other hand, Greg the Moralist slightly scares me: I buy the argument for the compulsive gambler and the professional gambler. Somebody good enough at calculating odds and reading situations to make money as a professional gambler should pick a segment that is positive-sum rather than zero-sum for the economy as a whole: he should go to Wall Street and become part of the global capital allocation mechanism.

I'd agree with Brad. Shouldn't those superpowers be directed at a positive-sum game rather than at a zero sum game?

Though I have to admit that Las Vegas is probably the best people-watching spot in the entire solar system.