DannyDevito
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New research suggests that more money really does lead to a more satisfying life. Surveys of thousands of Swedish lottery winners have provided persuasive evidence of this truth.
Lottery winners said they were substantially more satisfied with their lives than lottery losers. And those who won prizes worth hundreds of thousands of dollars reported being more satisfied than winners of mere tens of thousands.
These effects are remarkably durable. They were still evident up to two decades after a big win. (The researchers lacked the data to trace out even longer-term consequences.)
The findings appear in a research report, “Long-Run Effects of Lottery Wealth on Psychological Well-Being,” that has generated a lot of buzz among economists over the summer. The working paper is by Erik Lindqvist from the Stockholm School of Economics, Robert Ostling from Stockholm University and David Cesarini from New York University.
It is certain to feed a long-running debate about the role that personal finances play in shaping subjective well-being.
Many previous analyses have documented that people with higher incomes tend to report higher levels of life satisfaction. The relationship between income and satisfaction is remarkably similar across dozens of countries, suggesting that findings about Sweden likely apply to the United States.
Those earlier studies merely documented a correlation. What’s new here is the evidence that higher income is causing higher life satisfaction.
This research is able to reliably disentangle causation and correlation because a lottery effectively provides a randomized control trial. As in the trial of a new drug, those who received the treatment — in this case a big dose of money, courtesy of a lottery ticket — were compared both with those who received a smaller dose by winning a minor prize and with statistically matched individuals of the same age and sex who entered the lottery and didn’t win.
In a drug trial — as in a lottery — whether you get the big dose, a smaller dose or no dose is determined purely by chance. Scientists find this sort of trial to be persuasive because the random assignment ensures that lottery winnings are the only factor driving systematic differences between those who receive the treatment and those in the control group. It therefore isolates the effect of extra money in driving satisfaction.
Other studies by these authors — sometimes with other scholars — have tracked the economic lives of these lottery winners to further explore the consequences of wealth. Contrary to popular stereotypes, those who win hundreds of thousands of dollars don’t blow most of their winnings at once. Instead, they slowly spend their newfound wealth over many years. Many don’t quit their jobs, but they do tend to work a bit less and retire a bit earlier.
— (The New York Times)
Surprisingly, the increase in wealth caused by winning the lottery has few effects on the physical health of the winners or their children. It seems possible that family wealth might have quite different effects in a less egalitarian society, like the United States.
These results provide strong evidence in support of the standard economic view that money increases well-being, albeit not in an entirely uniform manner. It runs counter to the view championed by many psychologists that people largely adapt to their circumstances — including their financial situation.
— (The New York Times)
In an email, Cesarini characterized that perspective as the “widespread misperception that science has proven that winning the lottery often makes people miserable.” — (The New York Times)
Money Really Does Lead to a More Satisfying Life - The New York Times
Lottery winners said they were substantially more satisfied with their lives than lottery losers. And those who won prizes worth hundreds of thousands of dollars reported being more satisfied than winners of mere tens of thousands.
These effects are remarkably durable. They were still evident up to two decades after a big win. (The researchers lacked the data to trace out even longer-term consequences.)
The findings appear in a research report, “Long-Run Effects of Lottery Wealth on Psychological Well-Being,” that has generated a lot of buzz among economists over the summer. The working paper is by Erik Lindqvist from the Stockholm School of Economics, Robert Ostling from Stockholm University and David Cesarini from New York University.
It is certain to feed a long-running debate about the role that personal finances play in shaping subjective well-being.
Many previous analyses have documented that people with higher incomes tend to report higher levels of life satisfaction. The relationship between income and satisfaction is remarkably similar across dozens of countries, suggesting that findings about Sweden likely apply to the United States.
Those earlier studies merely documented a correlation. What’s new here is the evidence that higher income is causing higher life satisfaction.
This research is able to reliably disentangle causation and correlation because a lottery effectively provides a randomized control trial. As in the trial of a new drug, those who received the treatment — in this case a big dose of money, courtesy of a lottery ticket — were compared both with those who received a smaller dose by winning a minor prize and with statistically matched individuals of the same age and sex who entered the lottery and didn’t win.
In a drug trial — as in a lottery — whether you get the big dose, a smaller dose or no dose is determined purely by chance. Scientists find this sort of trial to be persuasive because the random assignment ensures that lottery winnings are the only factor driving systematic differences between those who receive the treatment and those in the control group. It therefore isolates the effect of extra money in driving satisfaction.
Other studies by these authors — sometimes with other scholars — have tracked the economic lives of these lottery winners to further explore the consequences of wealth. Contrary to popular stereotypes, those who win hundreds of thousands of dollars don’t blow most of their winnings at once. Instead, they slowly spend their newfound wealth over many years. Many don’t quit their jobs, but they do tend to work a bit less and retire a bit earlier.
— (The New York Times)
Surprisingly, the increase in wealth caused by winning the lottery has few effects on the physical health of the winners or their children. It seems possible that family wealth might have quite different effects in a less egalitarian society, like the United States.
These results provide strong evidence in support of the standard economic view that money increases well-being, albeit not in an entirely uniform manner. It runs counter to the view championed by many psychologists that people largely adapt to their circumstances — including their financial situation.
— (The New York Times)
In an email, Cesarini characterized that perspective as the “widespread misperception that science has proven that winning the lottery often makes people miserable.” — (The New York Times)
Money Really Does Lead to a More Satisfying Life - The New York Times
