Japan’s trio of tsunami, earthquake, and nuclear disaster has left the world stunned. As this column points out, even the experts were shocked. But while these events were highly unlikely, they were still possible. This column uses evidence from the Danish lottery to show that people tend to adjust their expectations of future events based on only small pockets of recent experience, often at their cost.

There is increasing public concern about gambling, and the UK government recently established a Gambling Commission. This column examines England’s historical experience with regulating and taxing gambling to draw lessons for the present.