Study debunks theory that lottery wins can affect the winner's health

“Life would be so different if I won the lottery.”

It’s a sentiment that most people have uttered in one form or another: whether they’ve spent decades clocking in and out of an office and are ready to hit the links, or they are just beginning to dip their toes into the 9-to-5 office culture and want to skip that step altogether and live the rest of their lives like the heir of an oil tycoon.

But a recent study is attempting to stick a pin in some of those dreams and letting out some of the hot air about the ostensibly life-changing effects of winning the lottery and wealth in general.

The paper, which was published in the Quarterly Journal of Economic, looks at administrative data on Swedish lottery winners, as well as their children, and how the “wealth shocks” affected their health.

The research examines a prize pool of nearly US$1 billion, making it 100 times larger than any previous study of lottery winners’ health.

The prizes varied in size, but 75 per cent of the pool was made up of wins in the range of 1 to 40 times the Swedish median annual disposable income or roughly $20,000 to $800,000.

Their health outcomes were compared to a control group who participated in the same lotteries but did not win large prizes.

The researchers concluded that there was “no evidence” that wealth impacts winners’ risk of mortality after 10 years or their health care utilization, except for a potential “small reduction” in the consumption of drugs.

The authors say that dip is primarily is found in the lottery winners usage of anti-anxiety medication, hypnotics and sedatives.

“We look at a large number of health outcomes and find no systematic tendency for winners and non-winners to differ,” one of the paper’s authors and professor of economics at New York University, David Cesarini, told Yahoo Finance Canada.

“Overall, our findings suggest that in affluent countries with extensive social safety nets, causal effects of wealth are not a major explanation for the positive relationship between income and longevity, nor of the observed positive relationships between children’s outcomes and their parents’ incomes.”

 The study also found “nominally significant” improvements in the 10-year mortality rate of certain subcategories, such as winners older than 70, women and those with a below-median income.

 “In our adult analyses, our estimates allow us to rule out all but very modest effects of wealth on overall long-run mortality, cause-specific mortality and an array of health care utilization variables,” write the authors in the paper.  

Perhaps most surprisingly, the study said there was no evidence of improvement in the health of people with a low socioeconomic status.

“I think people had very different expectations about what we would find for low (socioeconomic status) households,” Cesarini said.

The results contrast with previous research that indicates that people with low income have worse health care outcomes. This has been attributed to a “fight or flight” response that forces them to divert their resources away from long-term issues, or behavioural responses, such as smoking, excessive drinking, or having an unhealthy diet.

“In our mortality analyses, we find no evidence for a gradual accumulation of positive effects, or that wealth confers large benefits to members of groups that that the epidemiological literature has traditional identified as vulnerable,” said the authors.

However, the study did find that the children of lottery winners experienced some improved health care outcomes.

“In our intergenerational analyses, we find that wealth increases children’s heath care utilization in the years following the lottery and may also reduce obesity risk,” said the authors.

But they also saw an increase in their risk of hospitalization in the years following the lottery win.

And in other areas -- such as drug consumption, scholastic performance and skills -- the effects were largely negligible.

“With exception of obesity risk, we estimate precise zero or negative effects in subpopulations for which theories of child development predict larger benefits of wealth,” said the authors.

The study also tries to allay any concerns that its results may have been skewed by the fact that the wealth was obtained through the lottery.

Cesarini said they found “no evidence” that winners are more likely to quickly squander their money. In fact, he said they spend it “quite responsibly,” and at least 30 per cent of the lottery wealth remains ten years later.

He added that it is also rare for lottery winners to quit work entirely. Instead, they cut down on hours immediately, but only by a “relatively modest amount.”

“I think what is going on is that there is much popular demand for stories about lottery players who end up miserable,” said Cesarini.

“The problem, of course, is that many people who do not win large lottery prizes are also miserable. It is not clear that large-prize winners who are miserable are right to attribute their misery to the lottery prize they won.”

Cesarini said that the study also said that there is “no evidence” that lump-sum wealth and money paid in monthly installments have different effects.

The study also cautions that results drawn from its wealth-health graphs should be “viewed skeptically” in terms of their application in other countries.

 “Even though the ‘gradients’ between health and wealth show up reliably when we look across affluent countries, it is possible that the forces that generate the gradients are not the same,” said Cesarini.

“The effect of wealth on health probably varies across time and space.”

Part of the reason is that Sweden has a publically funded universal health care, and an educational system where schools follow a national curriculum and can’t charge tuition.

“Consequently, caution is warranted in extrapolating our results to other settings, especially to developing countries, where we have sound theoretical reasons to expect larger effects and evidence consistent with this expectation,” said the authors.

“Nor should one infer from our findings that large, positive wealth shocks will necessarily have small impacts on health care demand in developed countries without universal health care.”

Despite this need for caution when interpreting the results, Cesarini stresses the importance of the results in potentially debunking what he says is a “poorly understood” relationship between wealth and health.

“Our work shows that at least in Sweden, wealth effects on health are small. This allows us to restrict the set of hypotheses about the causes of the gradients that should be considered plausible,” he said.

“Efforts to improve people’s health are less likely to be successful if they are based on a faulty theory of the causes of health outcomes.”