I don’t think your examples are that plausible in the real world, at least not in terms of the reasoning you give. In your scenarios, it would be much better to hide the money away somewhere and let it accumulate, pretending to the world (and to Uncle Sam) that you spent it on crack or whatever, than to actually spend it on crack.
Having said that, if we determine the rationality of some behavior relative to the actual utility function of the individual, then we can see that for some (possible) utility functions, it would be rational to play the lottery and spend lots of money on crack. The a posteriori question is then whether there are in fact such people who are acting rationally relative to a pathological utility function, or whether they actually have sane utility functions but fail to act rationally relative to their utility function.
If we consider rationality in relation to a pre-existing utility function though, what is it that would allow us to recognize our utility function as being dysfunctional, which we seem to be capable of doing? Is there a different utility function that governs the selection of utility functions that govern behavior (which implies an infinite regress) or does the One True Utility Function govern itself and changes to itself, in which case it seems it would be possible to have a utility function relative to which smoking crack is always rational and relative to which any tweaking of the utility function to make smoking crack have less utility would be irrational.
A more plausible rationale for playing the lottery, as many have noted, is that spending $1 on a lottery ticket gives the individual non-financial benefits of more than $1 -- like keeping them from despairing that their life will ever improve, giving them warm fuzzies that result in better mood (and the attenuation of health problems that we know result from poor mood), etc. A small amount of hope is worth much more than $1 in many cases, and the less you have of it initially, the more it’s worth.
I don’t think your examples are that plausible in the real world, at least not in terms of the reasoning you give. In your scenarios, it would be much better to hide the money away somewhere and let it accumulate, pretending to the world (and to Uncle Sam) that you spent it on crack or whatever, than to actually spend it on crack.
Having said that, if we determine the rationality of some behavior relative to the actual utility function of the individual, then we can see that for some (possible) utility functions, it would be rational to play the lottery and spend lots of money on crack. The a posteriori question is then whether there are in fact such people who are acting rationally relative to a pathological utility function, or whether they actually have sane utility functions but fail to act rationally relative to their utility function.
If we consider rationality in relation to a pre-existing utility function though, what is it that would allow us to recognize our utility function as being dysfunctional, which we seem to be capable of doing? Is there a different utility function that governs the selection of utility functions that govern behavior (which implies an infinite regress) or does the One True Utility Function govern itself and changes to itself, in which case it seems it would be possible to have a utility function relative to which smoking crack is always rational and relative to which any tweaking of the utility function to make smoking crack have less utility would be irrational.
A more plausible rationale for playing the lottery, as many have noted, is that spending $1 on a lottery ticket gives the individual non-financial benefits of more than $1 -- like keeping them from despairing that their life will ever improve, giving them warm fuzzies that result in better mood (and the attenuation of health problems that we know result from poor mood), etc. A small amount of hope is worth much more than $1 in many cases, and the less you have of it initially, the more it’s worth.