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Money really does lead to a more satisfying life

Aug 25, 2018, 8:25 am

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After the Big WinAfter the Big Win: Money really does lead to a more satisfying lifeRating:

New research suggests that more money really does lead to a more satisfying life. Surveys of thousands of Swedish lottery winners have provided persuasive evidence of this truth.

Lottery winners said they were substantially more satisfied with their lives than lottery losers. And those who won prizes worth hundreds of thousands of dollars reported being more satisfied than winners of mere tens of thousands.

These effects are remarkably durable. They were still evident up to two decades after a big win. (The researchers lacked the data to trace out even longer-term consequences.)

The findings appear in a research report, "Long-Run Effects of Lottery Wealth on Psychological Well-Being," that has generated a lot of buzz among economists over the summer. The working paper is by Erik Lindqvist from the Stockholm School of Economics, Robert Ostling from Stockholm University and David Cesarini from New York University.

It is certain to feed a long-running debate about the role that personal finances play in shaping subjective well-being.

Many previous analyses — including several that I have conducted with my partner, Betsey Stevenson, a fellow University of Michigan economist — have documented that people with higher incomes tend to report higher levels of life satisfaction. The relationship between income and satisfaction is remarkably similar across dozens of countries, suggesting that findings about Sweden likely apply to the United States.

Those earlier studies merely documented a correlation. What's new here is the evidence that higher income is causing higher life satisfaction.

This research is able to reliably disentangle causation and correlation because a lottery effectively provides a randomized control trial. As in the trial of a new drug, those who received the treatment — in this case a big dose of money, courtesy of a lottery ticket — were compared both with those who received a smaller dose by winning a minor prize and with statistically matched individuals of the same age and sex who entered the lottery and didn't win.

In a drug trial — as in a lottery — whether you get the big dose, a smaller dose or no dose is determined purely by chance. Scientists find this sort of trial to be persuasive because the random assignment ensures that lottery winnings are the only factor driving systematic differences between those who receive the treatment and those in the control group. It therefore isolates the effect of extra money in driving satisfaction. The authors persuaded the Swedish statistical authorities to try to survey every winner of three of the country's major lotteries over more than a decade, and then used government records to track other aspects of the winners' lives. The researchers examined the same indicators for Swedes who had entered but lost the same lotteries or who won minor prizes.

Their surveys took several approaches to measuring subjective well-being. The measure most robustly linked to income asks people how satisfied they are with their lives as a whole. By contrast, responses to a question asking about happiness showed less of a connection to lottery winnings, and these effects could not be reliably distinguished from the effects of chance. Social scientists widely view questions about life satisfaction as eliciting a broad-based evaluation of one's life while questions about happiness yield responses more related to current moods or feelings.

A further set of questions probed the mental health of respondents, finding that greater income had no effect, although in related work, the same authors find that lottery winners are prescribed fewer mental health drugs. I interpret this as suggestive but not conclusive evidence that wealth improves one's mental health.

Other studies by these authors — sometimes with other scholars — have tracked the economic lives of these lottery winners to further explore the consequences of wealth. Contrary to popular stereotypes, those who win hundreds of thousands of dollars don't blow most of their winnings at once. Instead, they slowly spend their newfound wealth over many years. Many don't quit their jobs, but they do tend to work a bit less and retire a bit earlier.

Surprisingly, the increase in wealth caused by winning the lottery has few effects on the physical health of the winners or their children. It seems possible that family wealth might have quite different effects in a less egalitarian society, like the United States.

These results provide strong evidence in support of the standard economic view that money increases well-being, albeit not in an entirely uniform manner. It runs counter to the view championed by many psychologists that people largely adapt to their circumstances — including their financial situation.

In an email, Cesarini characterized that perspective as the "widespread misperception that science has proven that winning the lottery often makes people miserable."

That misperception most likely comes from an earlier generation of lottery studies. Perhaps the most famous of them is a 1978 study, "Lottery Winners and Accident Victims: Is Happiness Relative?" With the benefit of hindsight, that study appears to illustrate changing standards of empirical research more than any truths about well-being.

It compared the subjective well-being of 22 winners of the Illinois State Lottery with a control group of 22 people. The lottery winners rated themselves as happier after winning their prizes, but because the sample size was so small, the researchers concluded that this might reflect the influence of chance and failed to note that these data were consistent with the idea that the lottery winners were substantially happier. The problem with small samples is that it's hard to be sure of anything.

That same study also surveyed 29 paraplegic accident victims, finding them to be less happy than other people. Yet many popular accounts of this study describe it as if it supported the opposite proposition, that people adapt to personal tragedies.

I've seen this pattern before, as a counterintuitive finding captures the public's imagination, taking on a life of its own. In time, the facts become too interesting to check.

But eventually, science corrects itself. After 40 years, three determined economists, thousands of lottery winners and reams of detailed data have revealed a more reliable but less romantic truth: Money really does help people lead a more satisfying life.

WRAL

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40 comments. Last comment 2 years ago by KY Floyd.
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Avatar
Simpsonville
United States
Member #163184
January 22, 2015
2207 Posts
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Posted: August 25, 2018, 8:43 am - IP Logged

Doesn't give much credence to the old saying 'money is the root of all evil'.

Agree with their study, maybe someday I'll be in the winners group too.

    Avatar
    Northern Beaches
    Australia
    Member #187037
    January 9, 2018
    122 Posts
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    Posted: August 25, 2018, 9:19 am - IP Logged

    It's really about the financial security that a large win can bring. Money isn't good or evil, it is just a tool. It is how you use the tool, for good or ill. 

    If you living on a budget from month to month, and suddenly you will a jackpot, it can ease financial pressures. However, some can let a big win go their heads, with very negitive consequences.

      Avatar

      United States
      Member #180549
      March 12, 2017
      187 Posts
      Offline
      Posted: August 25, 2018, 9:40 am - IP Logged

      Well duh!  A pot would fix all of my problems for good.

        mikeintexas's avatar - h87TsB4
        Texas Panhandle
        United States
        Member #136839
        December 20, 2012
        1660 Posts
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        Posted: August 25, 2018, 9:48 am - IP Logged

        Doesn't give much credence to the old saying 'money is the root of all evil'.

        Agree with their study, maybe someday I'll be in the winners group too.

        That is misquote from a Bible verse:

        1 Timothy 6:10 (KJV)

        For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

        Epstein didn't kill himself.

          hearsetrax's avatar - alien on_computer.jpg

          United States
          Member #52343
          May 21, 2007
          3262 Posts
          Offline
          Posted: August 25, 2018, 9:54 am - IP Logged

          It's really about the financial security that a large win can bring. Money isn't good or evil, it is just a tool. It is how you use the tool, for good or ill. 

          If you living on a budget from month to month, and suddenly you will a jackpot, it can ease financial pressures. However, some can let a big win go their heads, with very negitive consequences.

          I Agree! couldn't have said it any better myself 

            hearsetrax's avatar - alien on_computer.jpg

            United States
            Member #52343
            May 21, 2007
            3262 Posts
            Offline
            Posted: August 25, 2018, 9:58 am - IP Logged

            Well duh!  A pot would fix all of my problems for good.

            Skeptical thars not enough money in the known universe to fix your problems

              wander73's avatar - Lottery-008.jpg

              United States
              Member #153769
              March 24, 2014
              4639 Posts
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              Posted: August 25, 2018, 9:59 am - IP Logged

              Money doesn't solve everything.

              I love pecans and making sales with commissions.   

              My amazon store is just like the lottery.

                Avatar
                Chasing $ Millions.
                White Shores- California
                United States
                Member #136473
                December 12, 2012
                6219 Posts
                Offline
                Posted: August 25, 2018, 10:14 am - IP Logged

                It's really about the financial security that a large win can bring. Money isn't good or evil, it is just a tool. It is how you use the tool, for good or ill. 

                If you living on a budget from month to month, and suddenly you will a jackpot, it can ease financial pressures. However, some can let a big win go their heads, with very negitive consequences.

                I Agree!... Take Sweden for instance: Those guys get 41 vacation days. I had to look it up. 25 paid vacation & 16 paid holidays. That’s unheard of in the Western World. Add a lottery jackpot win, and who in their right mind wouldn’t be content * to a degree.

                It is true that money cannot buy happiness, but l am willing to offer myself up, as a test subject to prove this theory is true, one way or another.Cool

                 * Voice of Reason *   

                 

                People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                  Avatar
                  Chasing $ Millions.
                  White Shores- California
                  United States
                  Member #136473
                  December 12, 2012
                  6219 Posts
                  Offline
                  Posted: August 25, 2018, 10:17 am - IP Logged

                  Money doesn't solve everything.

                  No it doesn’t. But it solves a lot.

                   * Voice of Reason *   

                   

                  People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                    Avatar
                    Chasing $ Millions.
                    White Shores- California
                    United States
                    Member #136473
                    December 12, 2012
                    6219 Posts
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                    Posted: August 25, 2018, 10:21 am - IP Logged

                    Well duh!  A pot would fix all of my problems for good.

                    It would, especially for you. All you have to do, is move to a State that “ Always Wins.”  Why You haven’t, is puzzling to say the least!

                     * Voice of Reason *   

                     

                    People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                      Coin Toss's avatar - shape barbed.jpg
                      100
                      Zeta Reticuli Star System
                      United States
                      Member #30469
                      January 17, 2006
                      11483 Posts
                      Offline
                      Posted: August 25, 2018, 11:39 am - IP Logged

                      Doesn't give much credence to the old saying 'money is the root of all evil'.

                      Agree with their study, maybe someday I'll be in the winners group too.

                      Bleudog101,

                      The saying is from the Bible and the entire saying is "The love of money is the root of all evil."

                      1 Timothy 6:10  King James Version (KJV)

                      10  For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

                      ////////////////////////////////////////////////

                      All,

                      Don't forget Sweden has 'cradle to grave' government care and thus very high taxes.

                      Sweden is a nation with extraordinary high tax rates. The average worker not only pays 30 percent of her or his income in visible taxes, but, additionally, close to 30 percent in hidden taxes. The defenders of the punishing tax burden argue that it is needed to maintain Sweden’s generous welfare system. While this claim may seem reasonable on its surface, a deeper look suggests that it is based on flawed analysis.

                      http://www.newgeography.com/content/00814-swedens-taxes-the-hidden-costs-the-welfare-state

                      I don't know if their lottery wins are taxed but I'm sure a sudden influx of cash is very welcome. 

                      Those who run the lotteries love it when players look for consistency in something that's designed not to have any. So many systems, so many theories, so few jackpot winners. 

                      Lep

                      There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                        Avatar

                        United States
                        Member #183941
                        August 21, 2017
                        2333 Posts
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                        Posted: August 25, 2018, 12:24 pm - IP Logged

                        Someone said,I've been rich,I've been poor,I rather be rich

                        Don't ever fall in love with a number it will always break ur heart!


                          United States
                          Member #188743
                          March 22, 2018
                          172 Posts
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                          Posted: August 25, 2018, 12:43 pm - IP Logged

                          LOL, so they needed a research mission to find this out? What a freaking joke of course your life is more satisfying duh I swear lot of people are stupid on this planet just write down stupid as a box of rocks

                            music*'s avatar - DiscoBallGlowing
                            Fresno, California
                            United States
                            Member #157851
                            August 2, 2014
                            3869 Posts
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                            Posted: August 25, 2018, 12:53 pm - IP Logged

                            This study shows that most American winners will be pleasantly surprised by how their lives will be changed in a positive way after winning the lottery. 

                             As has been stated by previous LP Members, It is not strangers that we have to be concerned about but family members and friends. Be prepared to spend a bit on financial advice and help.

                             The news loves to run with If it bleeds it leads. 

                              Observe how many winners there are and how few stories make it to the press and tv. The winners must be living boring lives. Which is good.

                            Party

                            When will COVID-19 be finished?  A vaccine may protect all of us.