While I know that my odds of actually winning the jackpot—1 in 175,223,510 to be exact—are essentially zero, I never bothered to calculate what my expected return is. That is, how much money am I expecting to get back after multiplying the odds and the prize money and subtracting out taxes? Spoiler alert: it’s a lot less than $2. In fact, the actual expected return is far worse than I would have guessed.

Because I'm acutely aware that the odds are stacked against me, I’ve made compromises with my lottery purchases. I will only buy tickets when the Mega Millions or Powerball jackpots are over $150 million (anything less would, theoretically, constrain my ability to live the dream); I only buy one ticket at a time; and I only buy tickets with the dimes and nickels that accumulate in between acceptable jackpots. (Needless to say, convenience-store clerks love that last part.) 

In the last year or so, since I've started playing, I've probably bought about 20 tickets—until recently, they were only a dollar.

When I buy a ticket, I choose my own numbers because it makes me feel as though I have some sort of control over the outcome. I roll with the numbers of important Packers; Aaron Rodgers’ 12 or Charles Woodson’s 21 always occupies the moneyball slot. Last week, I picked #4 on my ticket (in the pick-5 category, of course), a sign that I'm ready to forgive Brett Favre for his Vikings transgressions. 



So if the jackpot is $250 million, how much of a return can you expect on a $2.00 ticket? My conclusion was harrowing. After federal and state withholding taxes, my expected return is less than 94 cents. Ouch. Still probably worth my dimes and nickels as it’s not like they have a practical application that extends beyond sitting in a jar on my desk, but it was even less than I thought it’d be. Here's how I figured it out.



METHODOLOGY
The $250 million advertised jackpot is a little misleading. The jackpot is actually an annuity with 30 even payments of “just” $8,333,333.33 over 29 years (the first payment is immediate). The lottery also gives you the option of taking a lump sum payment, which, in this case, would be $156 million. Because only sissies would take the annuity payment, we will use the lump sum as the basis for our calculations.

 The $156 million is immediately subject to a 25% federal withholding tax, which brings us to $117 million. This is now subject to state (and, in New York City and Yonkers, municipal) withholding taxes. To calculate an average, I used the state tax withholding data from USAMega.com.

Because we want to figure out a representative average for the population who might be playing, an arithmetic average of the states’ rates would not fully account for the true proportions that each state contributes. To reconcile this issue, I used the electoral college as a guideline for proportions.

Using 270 To Win's electoral map, I subtracted out two electoral votes from each lottery-eligible state (42 of the 50 states + Washington D.C. have Powerball) to eliminate Senate equality, and calculated a weighted average (see Appendix 1 for Excel formulas) state withholding tax of about 4.6%. 

This now brings the lump sum payout to $111,611,351.58. Via Powerball's website, the odds of winning the jackpot are 1 in 175,223,510. Multiplying the payout and the odds together, we get an expected return of about 64 cents.



However, the jackpot is not the only way to win a prize on a Powerball ticket. This graph from the website shows other prizes that you can win and the odds of winning them:

Using the same methodology from above, the expected returns of the other prizes are, respectively, 14 cents, 1 cent, 1 cent, 1 cent, 2 cents, 1 cent, 4 cents, and 7 cents. Please see below for the Excel macro that details the calculations and places them in a table.

CONCLUSION
Add it all together and your average expected after-tax return on a $2 ticket (bought with after-tax income) is about 94 cents. It’s actually even a little bit lower because if multiple people win the jackpot, the prize is split evenly among them.

Simply put, a Powerball ticket is an absolutely terrible investment, far worse than any casino game. Via Insider LV, the house has a .6% advantage in a six-deck game of blackjack, 1.41% on Pass/Come Craps, and 8.1% on dollar slots.

In Powerball—when the jackpot is much higher than it is normally—you are relinquishing more than 53 cents per dollar in expected return after taxes.

I still don’t know that I have a particularly better use for dimes and nickels, but after this analysis, I’m likely almost completely done spending dollar bills or valuable laundry-eligible quarters in return for little more than the ability to daydream about what I’d do with the winnings.

(Download the Excel spreadsheet and appendices here.)

Ryan Glasspiegel is a freelance writer based in Chicago. He writes Sports Rapport. Follow him on Twitter @RGSpiegel .

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The three men were spotted ordering the $700 worth of wine at Bistro Bis on Capitol Hill by an associate professor of business at Rutgers University named Susan Feinberg. After dining in the same restaurant with her husband, Feinberg confronted Ryan and his pals about the high-end wine. The exchange became contentious. Ryan professed not to know the price of the wine, and one of his buddies responded to Feinberg's chastisement by loudly saying, "Fuck her."

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There are about 154 million Americans in the civilian labor force. About 140 million of them are employed. About 114 million of those employed are white people. White men who are older than 16 have 61 million of the jobs. So white men have 43% of all jobs, while white men make up about 36% of the U.S. population. White women 16 and older have about 53 million of the jobs (37%—about proportionate). That's already 114 million of the jobs (81% of all civilian jobs), leaving just 26 million jobs.

So there are about 15 million black people with civilian jobs in the U.S. (out of about 40 million black people in total), leaving 11 million jobs for the Asians and "Hispanics" and the "everyone else"—and the Asians have like 7 million of those.

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Some commentators have argued that extended unemployment insurance (UI) benefits are the key reason for high unemployment in the United States. Using data from 20 OECD countries we present evidence to the contrary. Our results suggest that only ½ percentage point of the current 9.4% jobless rate can be explained by the extension of UI benefits. Moreover, our calculations suggest that this effect will fade when the extended benefits eventually expire. These estimates—broadly in line with a recent study by the San Francisco Fed—reinforce our view that the overwhelming share of unemployment is cyclical rather than structural.

To the math!

We find that a 10 point increase in the replacement rate—broadly similar to what we saw during the Great Recession in the United States—is associated with a 0.2pt increase in the unemployment rate in the same year. Given the persistence in unemployment, the effect ultimately grows to just above 1 percentage point if the extension of the benefits is permanent (calculated as 0.2 divided by (1-0.83)). These estimates suggest that the unemployment rate is currently ½ percentage point higher due to the extension of the UI benefits than it otherwise would be.

So if you hear a politician saying this, please take away his job, because he's too misinformed to govern.

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• The bill affirms the tax rates. They are: 10% (for couples with income up to $17,000), 15% (for a single person, $34,000), 25% ($82,400), 28% (up to $171,850), 33% (up to and $379,149) and 35% (more than that!); that last bracket would have gone up to 39.6%.

• Self-employment tax goes down from 12.4% to 10.4%.

• The Social Security payroll tax stays down at 4.2 percent, from 6.2 percent—for annual income up to $106,800. Except for the self-employed! They pay 10.4%.

• Continues the reduced taxes on dividends and capital gains: Those rates are 0% for people in the 25% tax bracket or lower; they are 15% for those in higher brackets.

• The tax on transfer of wealth after death (by which we mean wealth that isn't put into put in foundations or other instruments) will remain at 35%—of all money beyond $5 million (or, essentially, $10 million for giving and/or inheriting couples). Which is to say, all money up to $5 million may be passed along tax-free, so estate taxes affect fewer than .2% of Americans.

• The "gift" tax remains at 35%, beyond an exemption of $13,000 a year and $10 million over a lifetime. The GST tax (inheritance that skips a generation) is taxable above $5 million beginning in 2011.

• There is a tax credit of $1000 for each child in the household, plus a little somethin' extra now in the "Earned Income Tax Credit," for people who made very little money in the year.

• All income levels may now convert individual retirement accounts to a Roth IRA at the extended lower tax rates, and split the taxable proceeds between two years, if they perform the conversion by the end of 2010. Additionally, up to $100,000 of an individual IRA may be given tax-free to charity.

• Teachers may have a deduction of up to $250 for out-of-pocket expenses!

And a few other things that point out that, as BusinessWeek put it, it's a great time to be rich.

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