Lottery: Take the cash option after all, especially in times of currently low inflation

This is an instance of a case where behavioral economics and behavioral psychology, exemplified in a book like Dan Ariely's "Predictably Irrational," can actually guide you to the wrong decision. (This isn't the only case. You'll see frequent claims that on pre-packaged foods, the larger size always will have the lower per-ounce price. If you check the shelving stickers, you'll find that is not true.

Back to where we were at, though.

Per the picture at left, and simple math? I can tell you that, at least right now, you should take the cash option on a lottery.

That's $30 million in inflationary adjustment for the annual payments. And, $30M divided by $115M is? 26.1 percent.

BUT, that's over 30 years!

Gotta divide again by 30.

Real answer? 0.87 percent. Yeah, it was that low in 2014 and 2015, but it's been almost twice that much every other year since the Great Recession. (More on inflation rates of the past century-plus, including monthly rates, here.) And, actually, the real answer isn't even 0.87 percent, because I didn't want to do the extra work of allowing for compound interest.

A quick teh Google to this site and dropping in the numbers of 115 and 30 years, then playing with percentages? It's actually 0.77 percent, compounded.

Uh, 2008 and 2015 are the only years since 1955 to have annual inflation rates below that.

Take the cash option.

And, if you win? Spare a brother a dime, or 0.775 percent?

Like food companies playing on a not always true truth, maybe lottery companies are doing this.

Or maybe they're banking on the post-coronavirus economy being that crappy for that long.

If THAT's the case, and actuaries are telling them that, you need to be doing other things. Maybe I do, too.