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Everything you know about the fate of lottery winners is probably wrong, according to science

Oct 19, 2018, 9:46 am

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After the Big WinAfter the Big Win: Everything you know about the fate of lottery winners is probably wrong, according to scienceRating:

Friday's Mega Millions jackpot has gone up to a record-breaking $970 million. On Saturday, Powerball will have a drawing for a $430 million jackpot. A winning ticket for either lottery will be life-changing, but some of the popular theories about the fate of lottery winners aren't necessarily accurate, according to a study published in May.

The study, published by the National Bureau of Economic Research, examined 3,362 Swedish lottery winners who scored at least $100,000, and surveyed them about their well-being five to 22 years after they hit the jackpot.

The study was conducted in Sweden and the lottery prizes were not in the high millions, but New York University economics professor Dr. Daniel Cesarini – a co-author of the study – says he does not believe the results would differ significantly if he were to study Americans who won multi-million dollar prizes.

"The prizes for the Mega Millions are way bigger that anything we studied. We looked at people who won up to $2 million," he said. "I'm sure that people who win much larger prizes wrestle with certain challenges that you wouldn't wrestle with if you win a $1 million."

Cesarini also believes his work with Swedish lottery winners is likely to be broadly applicable. He says a different study of American lottery winners showed similar reactions to his findings.

"It's hard to say if the results would be different if we conducted the study in America," he said "My guess would be that the results would not be radically different. There are some ways in which money might help in the United States compared to Sweden, for example heath care, but I would not be shocked if someone did a similar study in the U.S. and reached broadly similar conclusions, but there are some reasons to expect in certain ways results could differ."

Here are some misconceptions about the fate of lottery winners that Cesarini's study appears to debunk.

People who win big lottery jackpots blow their money in a few years

Cesarini said that a common misconception is that the more a person wins in the lottery, the more likely he or she is to spend it all.

An often-cited — but incorrect — anecdote about lottery winners falsely attributed to the National Endowment for Financial Education claims that about 70% of people who suddenly receive a windfall of cash will lose it within a few years. In January 2018, the National Endowment for Financial Education set the record straight and said that statistic was not backed up by any of their research.

Examples of the "curse of the lottery" abound — from the West Virginia man whose daughter and granddaughter died of overdoses after he won $315 million in 2002, to the Kentucky man who claimed a $27 million prize in 2001 and lost it all by 2006.

Cesarini says he and his fellow researchers found that lottery winners who won larger sums of up to $2 million actually retained their wealth well over a decade after the jackpot.

"We saw that people who won large sums of money were still wealthier 10 years after the fact, compared to people who won small sums of money," he says. "Also, if you look at things like labor supply – the people who win large sums of money do cut down on work but it's quite rare for them to quit altogether. They cut down mostly in the form of taking longer vacations."

Cesarini says people expect that a lot of winners immediately squander their wealth, but that is rare.

He adds: "What we see consistently is that they work a little bit less, but they spend the money quite intelligently. But that's not to say that nobody has wrestled with self-control problems and using the money in ways that are not conducive to their best interest. But, I think that their behavior is a lot more governed than you might believe if you're reading popular accounts of what happens."

All that money makes people miserable later in life

Researchers found happiness and mental health for people who won at least $100,00 in the lottery did not change significantly, but contrary to popular belief there was no proof it made any of the participants less happy.

Overall, the money won led to positive long-term satisfaction, and researchers found that there was a connection between a financial life satisfaction and long-term overall life satisfaction.

"Large-prize winners experience sustained increases in overall life satisfaction that persist for over a decade and show no evidence of dissipating with time," the study said.

People who win the lottery are happier every day

Researchers in this study measured life satisfaction by asking about participants' feelings of their overall life quality. Happiness was measured by asking about day-to-day feelings.

Cesarini says to study happiness, researchers asked participants questions like, "Do you smile a lot?" "Do you laugh a lot?" or "Do you feel happy today?"

Winning the lottery didn't seem to change overall happiness.

Where it did make a difference was life satisfaction. Researchers got at that by asking things like, "How happy are you with family and friends?" or "How happy are you with your finances?"

"We asked people about life satisfaction overall, an evaluative measure, and that's where we saw the strongest effects of lottery wealth," Cesarini says. "We also asked about their happiness, and for happiness we found there's no strong evidence that lottery winners are happier in the long run, but there is strong evidence that they are more satisfied with their lives in the long run."

Time, Lottery Post Staff

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40 comments. Last comment 2 years ago by One-Day.
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Bahamas
Member #133458
September 30, 2012
6792 Posts
Offline

I would be okay with being as happy as I am now and debt-free Banana

"Do everything you can. Then, leave the rest to luck."

    Avatar
    Simpsonville
    United States
    Member #163184
    January 22, 2015
    2260 Posts
    Offline

    Been one BUSY week for Todd and all his staff!

      CDanaT's avatar - Nolz june15.jpg
      Central TN
      United States
      Member #121189
      January 4, 2012
      4748 Posts
      Offline

      Been one BUSY week for Todd and all his staff!

      I Agree!

      Heck, I have revised my donation list twice already since Wednesday...Chair

      Integrity: There is just no substitute.

        Avatar
        North Carolina
        United States
        Member #149567
        December 3, 2013
        339 Posts
        Offline

        I can say that When I win the BIG ONE I will smile a lot!

        tempus omnia revelat

          Avatar

          United States
          Member #180549
          March 12, 2017
          192 Posts
          Offline

          A pot will fix all my problems instantly.

          How could it not?

          My mental illness would be immediately cured.

            Avatar
            Simpsonville
            United States
            Member #163184
            January 22, 2015
            2260 Posts
            Offline

            Will glad submit for a study on lottery winners...just need to hit it big.  I'm sure it is can of worms winning big, but willing to find out myself!

              CDanaT's avatar - Nolz june15.jpg
              Central TN
              United States
              Member #121189
              January 4, 2012
              4748 Posts
              Offline

              A pot will fix all my problems instantly.

              How could it not?

              My mental illness would be immediately cured.

              I wouldn't go quite THAT FAR   

              Integrity: There is just no substitute.

                Coin Toss's avatar - shape barbed.jpg
                100
                Zeta Reticuli Star System
                United States
                Member #30469
                January 17, 2006
                11498 Posts
                Offline

                I wouldn't go quite THAT FAR   

                Green laugh

                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
                  100
                  New York, NY
                  United States
                  Member #140630
                  March 23, 2013
                  10653 Posts
                  Offline

                  I asked the guy if he’d be ready tomorrow to cash my billion dollar ticket. He smiled then laughed then said yeah sure. I’m not sure he meant it.

                  Sometimes you do the right thing just because it’s right.

                    Avatar
                    100
                    New York, NY
                    United States
                    Member #140630
                    March 23, 2013
                    10653 Posts
                    Offline

                    There is something funny about this amount. Which would be interesting for this type of study. A billion dollars. Think about it. I wonder if anybody can. Yeah they say sure I can, I’d buy this I’d do that, etc etc. But all that stuff is small change to a billion dollars honestly. It’s too big of a number for most human minds to comprehend. We don’t come from billion dollar thoughts. We come from small hunter gatherer populations. So in that sense the lotteries with their ‘changes’ to the odds have succeeded. Saying more second prizes with higher odds, and we willingly accept it, hence a billion dollars, because we are not capable of thinking about such a large amount. And most likely none of us ever will. It’s just like the federal deficit. Nobody cares because we’re not capable of thinking about it.

                    Sometimes you do the right thing just because it’s right.

                      music*'s avatar - DiscoBallGlowing
                      USN United States Navy
                      Fresno, California
                      United States
                      Member #157851
                      August 2, 2014
                      3959 Posts
                      Offline

                      Although doing the media availability and the photo celebrity is not mentioned I believe that I would be happy doing both. 

                       I am happy to read this study and change my beliefs. 

                       "We are all in this together!" 

                        Avatar

                        United States
                        Member #171237
                        January 4, 2016
                        94 Posts
                        Offline

                        Well surprise surprise, just raised it to $1 billion/ $565.6 Million. Tuesday's Rollover is $1.6 Billion/$905 million.

                          Avatar

                          Sweden
                          Member #153624
                          March 20, 2014
                          213 Posts
                          Offline

                          I have read about this survey earlier. I think it’s a good study but I think it might be another result if conducted in another country. Sweden ranks high like other nordic countries in wellfare and I think happiness might not increase much because we already are so happy over here.

                          Return of Lotto Investment, ROI: 2019: 41% (march) | 2018 50% | 2017 47% | 2016 12,6% | 2015 20% | 2014 20%
                          Return of Stock market investment: 125%

                          Notable wins: Viking Lotto $1.152 - 2017

                            dpoly1's avatar - driver
                            PA
                            United States
                            Member #66139
                            October 16, 2008
                            1989 Posts
                            Offline

                            It would go a long way to make my life of chronic illness more comfortable ............

                            I would be grateful ..........

                            Cool

                            dpoly1 - Playing the lottery to save the jobs of those that build, transport, sell & maintain luxury items! -

                             

                            Eschew Poverty ........... Vote Conservative!