Sports
As of 1970, there was no fantasy baseball. In March, you didn’t fill out a bracket. The Super Bowl was not something ordinary people bet on. Following major sports as a fan was normal—betting on sports was niche. Now it is the other way around.
Day Trading and Daily Options
With stocks, returns tend to be higher the longer the holding period. Hold stocks for twenty years and you will do better than if you hold them for one year or for one day. But if stock prices trend up, people who own them will tend to gain wealth, regardless of holding period. Day traders will gain wealth, even though they probably will gain it at a slower rate than people with longer holding periods.
The psychological advantage of day trading is that it makes you feel more active. Instead of passively waiting for your portfolio to rise in value, you make decisions every day, and you can interpret outcomes as resulting from those decisions.
In the last few years, daily options trading has emerged. Apparently, people needed more excitement than merely trading stocks.
Bitcoin
I know that my libertarian friends will hate me for saying this, but the popularity of Bitcoin is due to the increased propensity of Americans to gamble. People play the Bitcoin market because the price is volatile and a lot of paper fortunes get made.
Causes for the gambling explosion
One reason that gambling has gone up is that we are richer. It is a form of recreation, and people can afford more recreation.
Another reason that gambling has gone up is that transaction costs are down. The provision of gambling services has become more competitive. A few Las Vegas oddsmakers used to have a cartel that owned the sports betting franchise. Wall Street brokerage fees used to be much higher than they are today. The “house” still wins from gambling, but the house takes a much smaller fraction than was the case 50 years ago.
A final reason that gambling has gone up is that we have become more oriented toward dopamine hits. In the era of smart phones and rapid communication, we value the excitement of rewards that come to us rapidly. We need the stimulation that comes from gambling.
Warning
I do not think that this ends well. Gamblers in stocks and Bitcoin are accumulating vast amounts of paper wealth. But at some point it could all come crashing down. If it does, it probably will take with it some of the paper wealth in housing as well.
A crash scenario will mess with the economy. It will lead to anger and scapegoating. Those of us who preach against the gambling culture will suffer along with everyone else.
Have a nice day. It happens to be our 45th wedding anniversary.
Don't forget the politician's addiction to spending which leverages gambling addiction as a voluntary form of public revenue generation
Why don't advertisements for government run lotteries include the omnipresent gratuitous "gambling problem? Call..."
Happy anniversary!