Winning Big but Feeling no Better? The Effect of Lottery Prizes on Physical and Mental Health

Abstract

SUMMARY We use British panel data to determine the exogenous impact of income on a number of individual health outcomes: general health status, mental health, physical health problems, and health behaviours (drinking and smoking). Lottery winnings allow us to make causal statements regarding the effect of income on health, as the amount won by winners is largely exogenous. Positive income shocks have no significant effect on self-assessed overall health, but a significant positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known gradient in health status in cross-sectional data, and second, general health should partly reflect mental health, so that we may expect both variables to move in the same direction. We propose a solution to the first apparent paradox by underlining the endogeneity of income. For the second, we show that lottery winnings are also associated with more smoking and social drinking. General health will reflect both mental health and the effect of these behaviours and so may not improve following a positive income shock.

The impact of diminished housing wealth on health in the United States: Evidence from the Great Recession

“…Previous research showed that poor health is associated with lower wealth (Smith, 1999;Poterba et al, 2010;Yilmazer and Scharff, 2014), while the causal relationship from wealth to health is relatively small (Smith, 1999;Adams et al, 2003;Meer et al, 2003;Lyons and Yilmazer, 2005;Michaud and van Soest, 2008;Apouey and Clark, 2014). Our findings support this narrative and match McInerney et al (2013), who show that wealth losses attributable to the October 2008 stock market crash increased feelings of depression and the use of antidepressant drugs, but did not lead to clinicallyvalidated depressive symptoms.…”

Do Minimum Wage Increases Influence Worker Health?

“…But this effect would likely take a long time to materialize, as the depreciation rate is a slow-moving parameter that is determined by a wide set of factors, many of which, like the health endowment, are exogenous to health behaviors. findings (Apouey and Clark 2015;Au and Johnston 2014;Ettner 1996;Evans, Wolfe, and Adler 2012;Frijters, Haisken-DeNew, and Shields 2005;Kim and Ruhm 2012;Meer, Miller, and Rosen 2003;Schmeiser 2009). For example, in recent work Apouey and Clark (2015) show that exogenous gains in income have no impact on self-reported general health, but such income gains do improve self-reported mental health.…”

“…For example, in recent work Apouey and Clark (2015) show that exogenous gains in income have no impact on self-reported general health, but such income gains do improve self-reported mental health. Moreover, several studies suggest that unhealthy goods (e.g., alcohol, tobacco, illicit drugs, and fattening foods) may also be normal goods, the consumption of which will rise with income gains, potentially reducing any income-induced health outcomes (Apouey and Clark 2015;Ettner 1996;Kenkel, Schmeiser, and Urban 2014;Petry 2000).…”

How Does Household Income Affect Child Personality Traits and Behaviors?

“…The small literature on lottery winnings and mental health implies a small positive effect of a one-time positive income transfer on mental health (Lindahl 2005; Apouey and Clark 2015; Cesarini et al 2014). Previous research has suggested that parents’ emotional and physical well-being are positively affected by increases in household income (Evans and Garthwaite 2014; Milligan and Stabile 2011; Jones, Milligan, and Stabile 2015).…”