Chances are GMA is fantasizing

What is the price elasticity of demand for fantasy? I don't know, and neither does GMA. But I suspect it would depend on the kind of fantasy one is buying. But the president fears that raising the prices of lotto tickets might drive people to switch to illegal numbers games, which, I think, shouldn't be illegal in the first place.

Lotteries are technically mostly losing propositions for players, not because of the low probabilities of winning fantastic wealth, but because of the administrative costs and profit margins of the operators and the government take. Otherwise, the game would be fair, meaning the ticket price would be equal to the probability of winning multiplied by the pot. In the case of 6/42, where the chance of hitting the jackpot is one in 5,245,786 and not a million and one as reported here, the jackpot should be 52,457,860 if the choices are uniformly distributed and all the numbers are taken, for the expected value to equal P10. (Here I assume away the consolation prices as insignificant). But the PCSO guarantees only P3 million for this variant, which implies that at a minimum, the PCSO assumes that there are at least 545,454 fantasizers at the start of each 'game').

I have observed that the queues do get longer as the pot increases, but at a declining rate, which means that eventually the lottery becomes fair and perhaps, even a winning proposition. So people are not that dumb after all, as mainstream economics suggests, starting with the letdown that lotteries are a regressive tax on the innumerate.

Many years ago, I welcomed the articles of one Dean Jorge Bocobo in the pages of the Inquirer because he 'sounded' numerate and scientific, as opposed to many opinion writers whose only claim was the strength of their convictions and prejudices, until one day he wrote a feature on the lottery, betraying his lack of understanding of probability theory and statistics. Unfortunately, when I see him on TV these days, I get the impression he has retrogressed even further to the level of the pundits he used to criticize.

If the president were sincere in her concern for impoverished players of lotto, she would be more productive if she reduces admin and operating costs of the lottery and revisiting the contract with the private operator. But more importantly, she can also reform the funds allocation system of the PCSO. This is a difficult task, I imagine because these funds are under presidential discretion. But she can convince me if she relinquishes control and makes PCSO earnings part of general funds under congressional control.
(Disclosure: in 2005 I helped an acquaintance settle hospital bills through political connections, by accessing PCSO funds. His wife underwent expensive brain surgery. Though I would not classify him as poor, there was just no way he could foot the bill. But how many people are able to access such funds, especially if they don't have political connections?)
(Aside: It's funny that one Cris Remonde from Argao, Cebu was one of those protesting the PCSO move. He might be related to Cerge Remonde of the presidential management staff, tasked by Arroyo to discuss the matter with the PCSO.
So what are the benefits and costs of fantasizing? While economics can help, perhaps psychology can do better.
If President Arroyo fantasizes about leaving a legacy for the Philippines, the chance of that might be one in a billion, and she also might need professional help. Wanna bet?