Another perspective is that letting luck play a role is a more cost efficient way to get people to take big risks. Maybe people wouldn't do some things (like move to Silicon Valley to re-imagine the way we do blah blah blah) without the chance of a big payday.
Diminishing returns on money are supported by happiness surveys and common sense. There is no reason to assume, as you seem to, that risky things are automatically better for society than non-risky things. IMO common sense suggests the opposite.
Also, risk is fungible. If you want people to do a thing that has a 0.1% chance of earning $1m, you can find a thousand people and just pay them $1k each. If you have $1k and want to turn it into a 0.1% of $1m, you can play roulette a few times (not completely free, but the house take is pretty low).
Would as many people play slots if winnings were taxed at 90%?
Probably, yes. My country's lottery is taxed at 50%. Gamblers are not generally rational.
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Diminishing returns on money are supported by happiness surveys and common sense. There is no reason to assume, as you seem to, that risky things are automatically better for society than non-risky things. IMO common sense suggests the opposite.
Also, risk is fungible. If you want people to do a thing that has a 0.1% chance of earning $1m, you can find a thousand people and just pay them $1k each. If you have $1k and want to turn it into a 0.1% of $1m, you can play roulette a few times (not completely free, but the house take is pretty low).
Probably, yes. My country's lottery is taxed at 50%. Gamblers are not generally rational.