The fat scouser's gambling debts aren't just very funny - there are some serious economics involved:
An England insider said: "Wayne feels very upset about this - and it's easy to see why.
"Nobody discouraged him from chasing his losses."
As Gary Neville no doubt pointed out, chasing losses is inconsistent with the conventional von Neumann-Morgenstern theory of expected utility. But it's just what behavioural economics would predict, in two ways:
1. The gambler's fallacy. Losers keep betting because they believe their luck must change soon.
2. Prospect theory. This, developed by Kahneman and Tversky (pdf) says that people become more willing to take risks as their losses increase. Bets that seem unacceptable when you're a few grand up can become attractive when you're a few grand down. This happens because people evaluate prospects not in terms of gains and losses in themselves, but relative to a particular benchmark - usually the amount they began with: "in for a penny, in for a pound" is the motto.
Prospect theory does more than just explain the fat scouser's behaviour. It has wider implications, as it might help explain three things:
1. Momentum in share returns. Investors who have lost money on a stock might continue holding it, in the hope of recouping theit losses. Prospect theory says that bubbles deflate only slowly.
2. The cost of recessions. People fear recessions more than orthodox economic theory predicts (pdf). One reason for this might be that they regard small losses from their benchmark - the status quo - with more aversion than expected utility predicts.
3. The Easterlin paradox - that big rises in income over time haven't led to big rises in happiness. Prospect theory doesn't just say that people hate losses relative to their benchmark. it also says that gains relative to that benchmark are valued less than expected utility predicts. In the short-term, our gains from growth are small - and in the long-term, our benchmarks rise as incomes rise.
* It's my solemn duty to remind you that this is not the first time the fat scouser has been accused of losing money on dogs .