Whatâ€™s the difference between a payday loan and a state lottery ticket?
You get something in exchange for a payday loan fee:Â credit.
You get nothing in exchange for a lottery ticket.Â Zilch.
Payday loan opponents cry over the $6 billion in annual fees the payday loan industry generates, without ever mentioning that 1) that the $40 billion lent against those fees goes straight into the economy and 2) those fees actually buy something (credit).
Yet somehow these same people, who claim to be â€œprotecting the poorâ€, neglect to mention that state lotteries sucked $56 billion out of the poor, money which filled state budget deficits, very little of which actually enters the economy.
$56 billion.Â Thatâ€™s fourteen times the amount spent on payday loans, and the purchasers get NOTHING in return for it â€“ except those select few who actually win.
From the linked article:
Kate Sweeny, an assistant professor of psychology at the University of California, Riverside, who studies how people respond to difficult life events, said after a few years in a down economy, some people feel no control over their financial futures — so they might turn their hope to the lottery. â€œWhat you are buying is maybe a chance to have financial relief at a time where finances arenâ€™t at their best for a lot of people,â€ Sweeny said.
For all the talk from payday opponents about borrowers being â€œtaken advantage ofâ€, where is the outrage on lotteries, which are nothing more than a regressive tax?Â This â€œinvestment in hopeâ€ is a con, perpetrated and sanctioned by the State, no less.Â One study shows that for every $10,000 decrease in household median income, the amount spent on lotteries increases 0.4%.
Fifteen states that have effectively banned payday loans offer a lottery.
So hereâ€™s the actual riddle â€“ why are payday loan opponents so wrapped up in a credit product that allegedly hurts the poor, but ignore a State-sponsored con game that is fourteen times worse?