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It turns out money can kind of buy happiness after all

Sep 30, 2019, 8:12 am

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Does winning the lottery even make you happier? For a long time, researchers said no. Research hadn't found any conclusive evidence that people who won large sums of money were happier afterward. There was even some evidence they were worse off.

This fact became widely known, partially because it's so appealing to many people. It's nice to think that life satisfaction isn't just about how much money you have, that other things matter more, that we can't solve all our problems with a sudden infusion of cash.

But there's a problem with that research: It's probably wrong. At least, that's what is argued by economists Andrew J. Oswald and Rainer Winkelmann at the University of Warwick in the new academic book The Economics of Happiness. Their chapter in the book makes the case that past research about the lottery was badly designed, which is why it found the counterintuitive conclusion that lottery winnings don't make us happy, instead of the much more boring truth: They totally do.

Economists have good reason — beyond just curiosity — to care whether lottery winners are happier than the rest of us. Lottery winners represent a great chance to explore whether increases in income make people happier. We know that there's a well-established association between higher income and happiness, but it can be tricky to say for sure that it's the higher income that causes happiness. Maybe happier people earn more money, or depressed people tend to earn very little money, or people with some general quality of life successfulness will be both happy and rich.

Lottery winners are selected at random, so they can help answer this question for us: Does money cause happiness?

Here's what we know about the effects of lottery winnings

The first paper to take a serious look at the happiness of lottery winnings was a 1978 paper by Philip Brickman and colleagues, titled "Lottery winners and accident victims: Is happiness relative?"

The theory they were testing was that big life events didn't affect happiness much. A big positive event, like winning the lottery, made smaller positive effects pale in comparison (and contributed less to happiness); similarly a big negative event, like a paralyzing accident, would not make people much sadder. They interviewed 29 accident victims, 22 lottery winners, and 22 people in the control group (meaning they didn't win a lottery or get paralyzed in an accident). They indeed found that the lottery winners were not happier than the controls by a statistically significant amount.

That, the new paper by Oswald and Winkelmann argues, was their first mistake. Twenty-two lottery winners is simply not very many; the difference in happiness between them and the control group would have needed to be enormous for Brickman to find a statistically significant effect.

But later studies of lottery winners found results suggesting that there is an effect on happiness. A 2007 study in Britain, for example, found that the recipients of medium-sized lottery wins (between 1,000 and 120,000 pounds) "go on eventually to exhibit significantly better psychological health." Their sample size is pretty small too — 137 observations — but six times as large as the sample size in the initial study.

Another study found that lottery winners have better mental health — probably because they experience less financial stress — but may be in worse physical health, thanks to making riskier decisions. But a competing study found that less-educated lottery winners have worse mental health after winning.

So what on earth is going on?

The analysis by Oswald and Winkelmann is that nearly all of the research up to this point has been using samples that are too small to consistently detect real results. As a result, some of them have found results and some of them have found none; some have found results only for certain subgroups (like less-educated lottery winners) and some have found opposite results for different measures of wellbeing (like physical and mental health). But the confusion would all go away if we had enough data.

That's where their own study comes in. "We have access to more winners with economically substantial winning amounts than almost any other study before us," Oswald and Winkelmann argue. In part because people keep winning the lottery, the high-quality data from Germany used for many of these studies now has 617 lottery winners with significant earnings. (The country keeps good records on this.) That's still not a very large sample size for complicated social science research, but it's a whole lot better than 22, or even 137. (Counting only winnings of more than 2,500 Euros ($2,770), Oswald and Winkelmann are down to 342 winners to analyze.)

Unlike many of the previous studies, they find, "All effects of interest are statistically significant." Winning the lottery does make you happier. Winning more money has a more pronounced effect on your happiness. There's certainly a lot more work to do in this vein, from testing non-German data sets to exploring how life satisfaction from a lotto win sticks around five or 10 years out. But if these results hold up, then the mysterious paradox that puzzled economists — why doesn't winning money make people more happy? — might be solved. Winning money does actually make people more happy.

The early studies look likely to have fallen prey to a common problem in social science research — studies that aren't powerful enough to detect effects even if there are some. A surprising share of published studies are underpowered, meaning they collect so little data they wouldn't find a result even if one was real. This can lead to false negatives — like the result that lottery winnings don't make people happy — and false positives, when the small sample size produces noise that is interpreted as a positive result. Making studies bigger tends to solve this, but it's expensive — so underpowered studies are likely to plague research for some time.

So the early research into the effects of the lottery may have gotten things wrong. But that's not to say that every lottery winner is better off. It's very plausible that a certain type of person is vulnerable to ending up worse-off than they started (though it's unwise to try to analyze too many subgroups of winners when you have a small sample size to start with; you're nearly sure to turn up false positives in your results). There are certainly notorious stories of people who won the lottery and ended up much worse off than if they'd never won at all.

But on the whole, it looks like the obvious is usually true — having more money makes people less stressed and more satisfied with their life. Money might not buy happiness, but it buys a lot of things that make the pursuit of happiness easier.


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24 comments. Last comment 11 months ago by mikeintexas.
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Raven62's avatar - binary
New Jersey
United States
Member #17842
June 28, 2005
130072 Posts

Happiness is a sense of well being, joy, or contentment. When people are successful, or safe, or lucky, they feel happiness.

A mind once stretched by a new idea never returns to its original dimensions!

Catch-22: A dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

Corruptissima re publica plurimae leges: When the republic is at its most corrupt the laws are most numerous.

    TheMeatman2005's avatar - lightening
    Brooklyn, NY
    United States
    Member #169719
    October 29, 2015
    1490 Posts

    Happiness is a sense of well being, joy, or contentment. When people are successful, or safe, or lucky, they feel happiness.

    Raven62, I Agree! with you. 

    If a person isn't a happy person before winning a lot of money, they probably won't be any happier after the windfall.

    Money just tends to amplify your current personality.

    ie: If a husband and wife have an unhappy marriage, winning the lottery will not instantly make them happy. It will most likely be the reason they finally divorce.

    On the other hand... if a couple is already happy, then a big win will not make them any happier, just give them the means to do more with their life. Such as quit their jobs and travel or have enough to secure their child / children's future education expenses  or financially help friends and family.


    The Meatman 🥩🍗🍔🍖🍤🌭

    “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

    Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

      United States
      Member #163184
      January 22, 2015
      2256 Posts

      Let me win big and no research study will be needed, nor for the few folks on my lottery split list either.   That being said, time to win the big one.

        hearsetrax's avatar - alien on_computer.jpg

        United States
        Member #52343
        May 21, 2007
        3285 Posts

        Let me win big and no research study will be needed, nor for the few folks on my lottery split list either.   That being said, time to win the big one.

          United States
          Member #165067
          March 24, 2015
          281 Posts

          As I've said all along, money can't buy happiness, but it is very effective at eliminating some of the common sources of unhappiness.

            United States
            Member #163184
            January 22, 2015
            2256 Posts

            He who laughs last laughs longest.

              CDanaT's avatar - Nolz june15.jpg
              Central TN
              United States
              Member #121189
              January 4, 2012
              4743 Posts

              I am more than willing to win a $5-10+ Million dollar lottery and after a decade let them learn whether I am happy or not NaughtyNaughty

              Integrity: There is just no substitute.

                Coin Toss's avatar - shape barbed.jpg
                Zeta Reticuli Star System
                United States
                Member #30469
                January 17, 2006
                11497 Posts

                Someone here on LP once posted that when you win a jackpot you just trade one set of problems for another.


                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. 


                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.

                  Chasing $ Millions.
                  White Shores- California
                  United States
                  Member #136473
                  December 12, 2012
                  6313 Posts

                  Just weigh it, and bag it. Start with the $1.00's.


                  dollar bill money GIF

                  Yes, Money can kind of buy happiness after all.

                   * Voice of Reason *   


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

                    San Diego, CA
                    United States
                    Member #58384
                    February 12, 2008
                    310 Posts

                    If I win a jackpot there is a zero percent chance I won't be happier.

                      Vergie6's avatar - DSCN5672 20-%20Edited%20%281%29.jpg
                      Be happy anyway!
                      North Carolina
                      United States
                      Member #59853
                      March 29, 2008
                      48699 Posts

                      I really do believe it would make me happy...ER....much happy...ER!

                      I'm relatively happy now but look at what all I could do with all of that money!

                      A man here where I live won the Mega Millions one time and he seems the same

                      now as he was  before...just has more money!

                      When he won it he kept quiet and got all of his ducks in a row...bought an RV

                      and he and his wife took off to visit relatives in Arizona I think it was so his phone

                      was not ringing nor anyone knocking on his door for quite awhile!

                      He was the first one to win the Mega Millions in NC.

                      I knew his sister but didn't know him that well.

                      She told me he had won before he came forward & I thought she was joking

                      but found out she wasn't.



                      George Micheal is singing in heaven now & the angels are cheering him on!

                        HoLeeKau's avatar - YheaShea
                        United States
                        Member #94279
                        July 17, 2010
                        2318 Posts

                        If I win a jackpot there is a zero percent chance I won't be happier.


                        The problems associated with not having money go away leaving you with more resources (emotional energy, time, etc.) to deal with the remaining problems.

                        As long as winners realize that their money can't buy love or friendships or true loyalty, I can't think of a reason they wouldn't be happier with wealth.

                          Bluegal1's avatar - Lottery-009.jpg
                          Queens NY
                          United States
                          Member #141852
                          April 25, 2013
                          202 Posts

                          Show me a person who doesn't like winning a large sum of money, and I'll show you an unhappy miserable broke schlep.  Money can help alleviate stress of unpaid bills and debt, which can at the very least bring peace of mind that can lead to happiness

                          Twin Peaks*"We are like the dreamer, who dreams, and then lives inside the dream. But, who is the dreamer?"*Twin Peaks

                            TheGameGrl's avatar - Lottery-012.jpg
                            A long and winding road
                            United States
                            Member #17083
                            June 10, 2005
                            6484 Posts

                            I never doubted that it wouldn't garner a sense of complete and utter joy!!   


                            "bout time some positives are released about winning .