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Prizes appreciating in value

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MikeK:

--- Quote from: Jeremy Nelson on July 10, 2025, 11:53:24 AM ---I don't claim to know how they intimately work, but the annuity that Wheel of Fortune offered in the 80s and 90s seems like it fits the category.

Obviously everyone comes from a different money situation, but I'm surprised that more people didn't play for it during the pick-your-prize bonus round era, as I remember it being worth at least twice the $25k on a couple occasions.

--- End quote ---
I agree with you 100%, and I say that without my financial literacy teacher hat on.

It's a simple case of instant gratification vs. delayed gratification.  Should you take the sure thing now, or wait 20 or 30 years for a larger payout?  If 20-year-old me was smarter and had better money habits, give me the annuity.  Present 50-year-old me with health concerns would take the money.

Joe Mello:
I guess how well all those X00 lottery ticket prizes could apply depends on when you scratch them off.


--- Quote from: Jeremy Nelson on July 10, 2025, 11:53:24 AM ---I don't claim to know how they intimately work, but the annuity that Wheel of Fortune offered in the 80s and 90s seems like it fits the category.

Obviously everyone comes from a different money situation, but I'm surprised that more people didn't play for it during the pick-your-prize bonus round era, as I remember it being worth at least twice the $25k on a couple occasions.
--- End quote ---
Whenever Powerball/Mega Millions enters the conversation, I feel like there are side conversations about taxes and ROI. The reasons you take the Straight Cash Homie option is that either you are paying less taxes and/or you can invest in products that create better interest than the 4-ish percent per year assigned to you by the lottery commission.

When the money is stupid high, the argument is for math nerds and people who feel like they need to "win" all the dang time. When the money is lower, then there's decisions to be made. I don't think anyone in 1988 would turn down 10k/year for x years, but 25k in a world where the median income is 28k makes a lot of problems go away immediately.

MSTieScott:
I was thinking of asking this spin-off question, too...

I was working on a show in which any big winner had to choose to be paid either via a very long annuity or via a lump sum that was significantly smaller than the amount it looked like they won. I got into a debate with someone over which would be the better option to take.

Let's say the prize was $500,000 -- not lottery jackpot money, but still a very meaningful amount. For simplicity's sake, let's say the lump sum option is half the prize ($250,000) and let's say the annuity option lasts for 25 years (so $20,000 a year for 25 years... I see now that isn't how lotteries pay out annuities, but it's what we assumed the annuity would be when we had our debate).

My position was that I'd rather have the assurance of $20,000 a year coming my way for more than two decades, which would give me flexibility in my career and a sizable rainy-day fund if I found myself suddenly unemployed long-term or hit with a medical emergency. His position was that he could do better investing $250,000 now to make up the $250,000 he didn't receive from the show. (In fairness, I don't have the drive to meticulously invest and watch over that kind of money in a way that would wring every last penny out of it.)

Is there a "correct" answer as to which payout option to take, or is it dependent on each person's financial attitude? For context, this debate was between two single people residing in Los Angeles, a city where it's impossible to live on $20,000 a year and where $250,000 is nowhere near the price of a house.

TLEberle:
The correct answer is whatever works for each person and his or her circumstances—even if I won a coupon worth $100k in 2041 I might be looking to see what I might be able to sell it for.

Bob Harris won $200,000 on Super Greed and sold the annuity for $60k. He also sold the twin Camaros he won as a five time winner on Jeopardy. Utility is different for everyone.

Several shows with a seven figure prize allow the choice of being paid over time or the market value of the relevant annuity. When Millionaire reduced the prizes for questions 10, 11 and 12 they also split the prize for $500k or $1 million as part instantly and the rest over ten or twenty years.

That Don Guy:
Cullen TPIR gave away a casting of The Thinker, supposedly signed by Rodin himself; assuming the contestant kept it (the taxes on a $20,000 item back then would have been rather high), it must be worth far more than that now.

Speaking of taxes, somebody mentioned the Rolls-Royce given away on The New Treasure Hunt; I am pretty sure the contestant had to sell it to pay the taxes on it.

Somebody mentioned zonks on Hall LMAD; what was the largest zonk that anyone actually kept? (I am assuming that one of the reasons zonks on the Brady version are clearly marked is to prevent the contestant from actually trying to keep it.) I want to say that it was a bull. They once gave away an actual oil derrick (the kind that rotates on one end while the other end goes up and down), but talked the contestant into accepting another prize instead. There were also at least two times where a zonk winner traded it back for a spot in the Big Deal.

The OP also mentioned a prize in gold - besides the one-ounce gold bars occasionally up for bid on TPIR, I can think of a couple of other shows that gave away gold: Dealer's Choice gave away gold bars (and also silver bars - now there's something that appreciated in value, percentagewise), and on ABC's one season of The Krypton Factor, the advertised prize was $50,000 in gold, but on the final episode, the winner got the choice between the gold and cash, and took the money instead.

Another prize to consider: airplanes - not microlights, but ones where you need a license. Assuming a Piper or Cessna from the 1970s or early 1980s is still in something resembling flying condition, it is worth far more than its purchase price now, as the price of new planes skyrocketed at some point because of the cost of the manufacturers' liability insurance.

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