- The study asked more than 3,000 lottery winners about their mental health, happiness and life satisfaction years after winning big cash prizes.
- Most winners reported greater life satisfaction, but less significant changes in mental health and happiness.
- The recent Mega Millions and Powerball jackpots could be different, however, given the sheer size of the prizes.
You’ve probably heard the horror stories about lottery winners before: Someone wins a huge cash prize. Life is good. But then things turn dark, and what started as an unfathomable blessing slowly reveals itself to be a curse.
The downward spiral is usually caused by one or a combination of several factors: winners manage the money poorly and it vanishes in a few years; family and friends won’t stop asking for cash, turning resentful with every dodged favor; life without a job or responsibility becomes meaningless; or, in the grimmest of fates, the winner becomes a mark for local criminals, as was the case for 20-year-old lottery winner Craigory Burch Jr. after a group of masked men murdered him during a home invasion in 2016.
These scenarios have all played out among lottery winners. But despite the deterministic adage that says “winning the lottery will ruin your life,” a recent study shows that winning big cash prizes often leads to big increases in life satisfaction over the long term.
The study, led by researchers with the Stockholm School of Economics, Stockholm University and New York University, involved 3,000 Swedish lottery winners who had won a combined $277 million some five to 22 years earlier. The researchers had them answer questions like, “All things considered, how happy would you say you are?” and, “Taking all things together in your life, how satisfied would you say that you are with your life these days?”
The participants reported being generally more satisfied with life after winning the lottery.
“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 researchers wrote.
The sudden wealth seemed to have smaller impacts on mental health and happiness, however.
“…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,” Dr. Daniel Cesarini, a co-author of the study, told Time.
Don’t most lottery winners end up broke?
People often say that most lottery winners end up broke. That’s partly thanks to an often-cited a statistic from the National Endowment for Financial Education (NEFE) that claimed 70% of lottery winners go bankrupt just a few years after winning. In January, however, the NEFE said that statistic isn’t backed up by research.
The recent study also showed that most lottery winners don’t blow through their winnings. In fact, the researchers found that most winners don’t even quit their jobs.
“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,” Cesarini said. “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.”
Mega Millions and Powerball
Still, the 2018 study only focused on lottery winners who won between $100,000 and $2 million. The recent Mega Millions and Powerball jackpots–$1.6 billion and $750 million, respectively–are arguably different beasts altogether.
“The prizes for the Mega Millions are way bigger that anything we studied. We looked at people who won up to $2 million,” Cesarini 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.”
The recent study was also conducted in Sweden, and it’s possible there’s something about American culture that might lead winners to handle their sudden fortunes differently.
“It’s hard to say if the results would be different if we conducted the study in America,” Cesarini 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.”