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Will winning a major lottery or giant jackpot ruin your life?

21 March 2011

By Alan Krigman

Anecdotal evidence. You've been exposed to it frequently. As when politicians explain why they're trying to regulate the rocking horse industry by mentioning little Sally Jones from Muncie IN who broke her arm falling off one. The story may well be true. However, as an isolated incident, it doesn't justify drawing a general conclusion. This, even when multiple such anecdotes are cited, because there's no statistical validity without giving details like the number of rocking horse riders queried, how those surveyed were picked, the questions asked, the types of injuries sustained, Sally's equestrian style, and the characteristics of the specific toy involved.

Were you to believe the anecdotal evidence about winning a mega lottery or jackpot, or otherwise obtaining a pile of what's called "sudden money," you'd conclude that doing so puts solid citizens on the road to ruin. Bankruptcy, jail for embezzlement, estrangement from family, loss of old friends, illness, or worse. There's even a TV show "proving" how dire a destiny it is.

Empirical, as opposed to anecdotal, evidence follows from legitimate research. And there's a lot of empirical evidence about the outlook for folks unexpectedly coming into fortunes. To be sure, alternate studies don't necessarily yield identical results. This, owing to factors such as different ways subjects queried are picked and criteria by which their fates are measured. Reliable researchers, however, validate their work by explicitly citing such essentials. And, to an extent you may find surprising, empirical evidence suggests that those who lose big by winning big are a minority, while also dispelling other popular notions about sudden money recipients.
Research by Ipsos MORI for the British National Lottery, for instance, revealed just 2 percent of winners admitting to being less happy after than before their strike, while 55 percent said they were happier and 43 percent that their happiness level was unaffected because they were happy already. In terms of relationships, 95 percent of the married winners remained so and 90 percent who previously had a "best friend" still enjoyed that status with the same person. Another widely held stereotype was contradicted in that 48 percent of the "winners who were in regular work before their win were still in the same job." Another 15 percent of winners were still working but changed jobs, of whom 45 percent used some of the proceeds to start their own businesses.

Philip Brockman and Dan Coates of Northwestern University and Ronnie Janoff-Bulman of the University of Massachusetts also investigated lottery winners' contentment . They interviewed 22 subjects who got $50,000 to $1 million in the Illinois Lottery, and a sample of 22 "controls" selected randomly from the same geographical areas. Of the winners, 64 percent gave examples of how their lives had been altered, but only 23 percent said "their lifestyle in general had changed." In addition, "the large majority of the changes mentioned were positive, including financial security, increased leisure time, easier retirement, and increased celebrity status. Negative effects of winning, if any, were always mentioned together with some positive feature." On a scale from 0 (the worst possible thing that could happen) to 5 (the best possible thing), with 2.5 as neutral, on the average, "lottery winners rated winning as 3.78."

H Roy Kaplan of the Florida Institute of Technology addressed the notion that lotteries appeal mainly to individuals who see no other path to success. Studying 576 lottery winners in 12 states, he found they not only came from all education and employment backgrounds but were clustered in higher income categories than the general population. Further, "winners did not [tend to] engage in lavish spending sprees and instead gave large amounts of their winnings to their children and their churches. The most common expenditures were for houses, automobiles and trips... Overall, winners were well-adjusted, secure, and generally happy from the experience."

Eileen Gallo of Gallo Consulting obtained somewhat different figures. She found 76 percent of winners viewing their sudden acquisition of wealth as positive, 10 percent as neutral, and 14 percent as negative. Dr Gallo conjectured that the higher rate of negativity in her analysis than many other studies – and closer to what's typically thought – resulted from two elements. First, those with this opinion appeared as "helpless and unable to make decisions. Such passivity often leads to people taking advantage of them and making decisions for them." And, second, winners whose experiences get into the mass media, and who coincidentally participated in her research – were volunteers. As such, they may have been eager for publicity to seek "vindication for perceived wrongs" and who accordingly differ substantively from winners who prefer anonymity.

Pretend the empirical evidence showed that sudden money on a grand scale did destroy most of the people who got it. You'd still buy those lottery tickets, pump the quarters into the slots, and search the Internet for long-lost rich relatives – er, wouldn't you? After all, you're brighter than the bozos who blow it. For, as the odester observant of abundance, Sumner A Ingmark, adduced:
Those endowed with perspicacity,
Aren't defeated by voracity.

Alan Krigman
Alan Krigman was a weekly syndicated newspaper gaming columnist and Editor & Publisher of Winning Ways, a monthly newsletter for casino aficionados. His columns were focused on those interested in gambling probability and statistics. He passed away in October, 2013.