Re: Get Out of (Tax) Jail Free

From: Dave Long (
Date: Thu Mar 29 2001 - 10:11:26 PST

[my apologies for the double post ...
I'd meant for this to go out Wednesday]

> Someone I know once suggested that we have a national lottery (just like
> the standard powerball and whatever else "lotto" state things there are)
> where the winner is exempt from paying income tax for the rest of their lives.

Someone where I did my undergrad once
suggested that just cheating on taxes
was preferable to playing lotteries,
at least for rational actors. After
all, even when a lottery has a decent
expectation value, its high variance
should make it unattractive.


How is roulette similar to lotteries?

How are high tech investments similar
to roulette?

How about high growth economies? Do
they share the same set of outcomes?
(mode much less than mean)

What are the implications of the above
for economic darwinism?

(There is an interesting picture in
Shinbrot & Muzzio's "Noise to Order"
review article, pg 253 of Nature
v. 410, 8 March 2001.

It shows a box with two compartments
and a slotted divider, across which
steel beads were initially uniformly
distributed. Due to agitation, when
one side of the box gets more beads
than the other (remember, reversion
to mean is only a relative, not an
absolute, effect) it will dissipate
energy faster, and so the box winds
up with a few very energetic beads
in one side and the rest slurrying
around in the bottom of the other)

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