Some of us are appalled at the idea of buying lottery tickets. The chances of winning, you might say, are so slim (not mentioning negative expected value) that I'd much rather buy a beer to boost my utility. And it might be quite rightly so -- the lottery benefits mostly from people who don't know basic probability theory, find it difficult to internalize really large or really small numbers, or are simply risk-loving.
But if you swear you would never willingly participate in a lottery, think again. I will reveal a secret to you. Granted, this is somewhat of a simplification, I'll admit, but one that has some merit nonetheless.
The chances are, you have been to a doctor. Any doctor, say, a dentist. You may even have complained at the amount of money you had to pay for service. When you consider what goes into the money you pay, you start separating out the doctor's honorarium, the cost of the supporting staff (the ladies in the reception that know your name when you enter the office), the cost of the office itself (and the magazine subscriptions); more indirectly, the cost of the bureaucracy required to sustain the insurance program you're subscribed to (and yes, the cost of these statements you get in the mail), and so on. One of these myriad hidden costs struck me as very surprising -- it's the cost of a lottery ticket!
How so? We live in a culture of litigation. People love to sue other people, perhaps in a modern manifestation of bullying (which really is in the human nature), perhaps as a gamble (many people I'm sure think they can "cheat" the system), perhaps out of some conception of social justice using as its medium the one truly universal, fully transferrable, comparable and quantitative measure of your fit as a member of the society -- money.
We most often sue medical practitioners, probably because we go to various kinds of doctors a lot, because the doctors perform work closest to what we hold the most dear (our bodies), or because our bodies are enough of enigmas to allow us to stand our argument in court (it's not like an expect can measure how much it hurts in some truly universal, fully transferrable, comparable and quantitative measure -- ironically, however, we do believe that we can measure the compensation we should get in the very same unit). It's just a fact of life.
Doctors know this, and they know that those lawsuits are a kind of an act of randomness. It's never clear what circumstances may cause a patient to decide to sue (to be fair, I'm not exonerating medical practitioners -- it's quite possible that the lawsuit is due to a legitimate error, malpractice, or gross negligence!). To ease their life, doctors buy legal insurance -- it's just like life insurance, but it allows the doctors to protect themselves from the costs of lawsuits for a low monthly fee. This is smart -- it reduces the risk as seen by the doctor, given that lawsuits do happen.
Now the punchline -- guess who's paying for this low monthly fee! Great lottery you're part of...