Lottery tickets have been bought and sold in many countries for several centuries. There are many discussions of the historical social customs attending lotteries; the psychological, gambling, and fraudulent aspects of lotteries; the moral issues involved in the state licensing of lotteries; the lottery as a source of government revenue; and the mechanics of drawing. Economists have generally neglected to study the historical significance of lotteries. Friedman and Savage have suggested that the lottery may be a fruitful source of historical economic data; more recently, Aitken examined in some detail a large lottery firm which operated in the United States between 1821 and 1834. The purpose of this paper is to set down systematically quantitative measures of two essential lottery features: the inequality of the prize distribution and the actuarial value of the gamble. Some interesting historical comparisons can be made, and some hypotheses are suggested by the data which might be the subject of further research.
The lotteries of this study are restricted to those with cash prizes to lend some uniformity to the lottery terms and, from the consumer's point of view, to make all alternatives money incomes. The selection of the sample can best be described by giving a short history of English and United States lotteries.