What’s the difference between a payday loan and a state lottery ticket?

You get something in exchange for a payday loan fee:  credit.

You get nothing in exchange for a lottery ticket.  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 “protecting the poor”, 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.  That’s fourteen times the amount spent on payday loans, and the purchasers get NOTHING in return for it – 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. “What you are buying is maybe a chance to have financial relief at a time where finances aren’t at their best for a lot of people,” Sweeny said.

For all the talk from payday opponents about borrowers being “taken advantage of”, where is the outrage on lotteries, which are nothing more than a regressive tax?  This “investment in hope” is a con, perpetrated and sanctioned by the State, no less.  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 here’s the actual riddle – 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?

Be Sociable, Share!