A Probabilistic Model for Measuring Stock Returns and the Returns from Playing Lottery Tickets: The Basis of an Instructional Activity

Authors

Abstract

Many individuals indicate that playing the lottery is a legitimate way to generate wealth, including retirement savings. We offer a methodology designed to create interactive learning activities comparing the results of playing the lottery versus investing in stocks to create wealth. To emphasize the stochastic nature of investment and lottery returns, we employ a Monte Carlo simulation that draws from probability distributions created from lottery payoffs and historical stock returns. The model results demonstrate, visually and numerically that stock investments generally outperform the lottery in generating wealth.

Recommended Citation

(2026) "A Probabilistic Model for Measuring Stock Returns and the Returns from Playing Lottery Tickets: The Basis of an Instructional Activity," Journal of Economics and Finance Education: Vol. 7: Iss. 2, Article 2.
Available at: https://scholarship.rollins.edu/jefe/vol7/iss2/2