Riches to Rags, and Other Lottery Winning Myths

Research reveals the surprisingly positive behavior of lottery winners.

Posted Oct 22, 2018

We have all heard the stories.  Lottery winners squandering their sudden fortune on reckless extravagance, living excessively beyond their means, and going bankrupt. Yet scores of people play the lottery anyway despite such anecdotal reports.  Why?  

Because everyone believes they can weather the windfall. Research corroborates this optimism, revealing that contrary to stereotype, many winners are perfectly capable of doing just that. 

Myth #1: Lottery Winners Blow All Their Winnings

Anna Hedenus, in “Pennies from heaven?” (2014) examined how lottery winners view and consume prize money.[1] She begins by noting that the source of wealth impacts the way it is spent and that sudden financial prosperity is linked with psychological and social risks.  Analyzing interviews conducted with lottery winners, she reports that risky behavior can be avoided by earmarking winnings, thereby imposing restrictions on its use.

She explains that conceptions of winnings, including whether the money is viewed as personal or shared, the significance of the amount, and whether the money is viewed as a risk or an opportunity, drive spending decisions.  These include using the money to pay off loans, maintain a “normal” standard of living, indulge in selfish pleasures, or achieve economic independence. 

Myth #2: Lottery Wealth Improves Health 

Rich people are healthier, right?  Research says: not necessarily.  Benedicte Apouey and Andrew E. Clark (2015) sought to explore the link between income and health within the context of winning the lottery.[2]  They examined the effect of income on general health, physical health, mental health, as well as health-related behaviors such as smoking and drinking.  

In relation to winning the lottery, they found that “positive income shocks” have no significant impact on individual self-assessment of overall health, but had a significant positive impact when it comes to mental health.  

So, do lottery winners acquire healthier behaviors? Some probably do.  But Apouey and Clark found lottery winning was correlated with a higher amount of smoking and social drinking.  They conclude that general health reflects a combination of mental health as well as the effects of such habits, and therefore would not necessarily improve after a lottery winning.

Myth #3: Lottery Winners Quit Their Jobs

Have any of your co-workers told you that if you don´t see them after the big drawing you will know why? Research says you are likely to see them next week anyway—even if they hit the jackpot.

Richard D. Arvey et al. (2004) studied under what conditions lottery winners would continue in their present jobs.[3]  After they controlled for variables such as gender, age, education, occupation, and job satisfaction, they found that work centrality — as well as the amount of winnings — were significantly related to whether winners continued to work.  They also found the interaction between the two to be significantly related to continuing to work.

They define work centrality as “the degree of general importance that working has in one’s life at any given time.”  They note that research supports the central and fundamental role work plays in the lives of individuals. For some people, it ranks second place in importance, superseded only by family. 

The results of their study found that lucky lottery players who viewed work as central or important in their lives were less likely to stop working, despite their winnings.

The authors explain two perspectives that have been used to explain the centrality of work. One provides an extrinsic perspective where work functions as a means to financial security and material needs. The other provides an intrinsic perspective, bolstering self-esteem, sense of accomplishment, status, and personal identity.  One can imagine how an intrinsic perspective would fuel the desire to keep working despite the elimination of financial need.  

How much did lucky lottery players have to win?  The authors report that the average amount of winnings among people who chose to keep working was $2.59 million—indicating the threshold for quitting a job was high.  They cite one participant, a 64-year old bus driver who won $20 million dollars, as explaining, the “lottery is just a bonus that came my way, it has not or will not affect my work habits and goals in life.”

So, just in case you are holding the golden ticket, myths and stereotypes remind us of the perils of sudden wealth, but research reveals healthy ways to avoid them.  Good luck.

References

[1]Anna Hedenus, “Pennies from heaven? Conceptions and earmarking of lottery prize money,” The British Journal of Sociology 65 iss. 2, 2014, 225-244. 

[2]Benedicte Apouey and Andrew E. Clark, “Winning Big but Feeling No Better? The Effect of Lottery Prizes on Physical and Mental Health,” Health Economics.24, no. 5, 2015, 516–538. 

[3]Richard D. Arvey, Itzhak Harpaz, and Hui Liao, “Work Centrality and Post-Award Work Behavior of Lottery Winners,” The Journal of Psychology 138, no. 5, 2004, 404–420.