Lotteries And Happiness We assume that winning the lottery will make us happier. In some ways it does, in others — not so much.
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Lotteries And Happiness

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Lotteries And Happiness

Lotteries And Happiness

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Earlier this week, the Mega Millions jackpot got up to $1.6 billion. But Stacey and I both got kind of lazy, and we did not get around to buying those lottery tickets.


It was a busy week.

GARCIA: I know. There were things to do and, well, somebody else in South Carolina won instead. Congrats to that person.

VANEK SMITH: And, you know, Cardiff, we were just kind of joking around like, well, the chances of winning are minuscule. And like...


VANEK SMITH: ...And winning's such a drag - right? - because then everybody's hitting you up for money. And all of a sudden, you don't know who your real friends are. And, you know, I mean, really money does not buy happiness anyway.

GARCIA: That being said, I would not mind testing the proposition, right?

VANEK SMITH: (Laughter).

GARCIA: Like, there's only one way to find out, people.

VANEK SMITH: That's true. I would not mind testing that proposition out either. But seriously, there is actually an idea in psychology - and I love this term so much. It is the hedonic treadmill. And this is the idea that when something really great happens to you like winning the lottery, you're really happy at first, and your happiness goes up. But then eventually you just get used to your new life, and you go back to your baseline level of happiness.

GARCIA: Yeah. And this is actually a really hotly debated topic in economics as well, this question of whether the hedonic treadmill is a real thing. I mean, could it be true that if you suddenly get a lot more money, you just change what you expect out of life and then you're not happier than you were before? Such a sad concept.

VANEK SMITH: I think, you know - listen; if someone wants to give us all of their money...

GARCIA: I will take it.

VANEK SMITH: ...I feel like we could try that out here at THE INDICATOR and see - and do this experiment ourselves (laughter).

GARCIA: We're not going to say no.

VANEK SMITH: So, you know, anybody out there, we are very willing lab rats. This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.

GARCIA: And I'm Cardiff Garcia. Today on the show, lotteries and happiness.


ERIK LINDQVIST: I'm Erik Lindqvist. I'm a professor of economics at the - at Stockholm University in Sweden.

GARCIA: Erik and his co-authors published a big study earlier this year that looked at thousands of people in Sweden who have played the lottery in the last few decades. And then Erik compared the lottery winners and how they felt to the people who bought lottery tickets but did not win.

VANEK SMITH: And Erik's research looked specifically at the long-term effects of having won the lottery. So it measured how people felt starting 5 years after they'd played the lottery all the way through 22 years after they'd played. And so they could see whether any effect of winning the lottery would, you know, diminish or go away over time.

GARCIA: Yeah. And crucially, the study did not just ask people how happy they were in the years after they played the lottery. It also asked them how satisfied they were with their lives.

LINDQVIST: These two questions may seem similar. And they are pretty similar. But there is a difference in the sense that when you ask people about happiness, you ask them about an emotion, how they feel, whereas if you ask them how satisfied they are with their lives, probably people kind of take a step back and think about what they have in their lives in a more detached manner.

VANEK SMITH: So these are two different measures of happiness. One is how happy you feel from moment to moment, and the other one is how satisfied you are with your life overall, how you regard your life.

GARCIA: And it turns out that winning the lottery has a different effect on these two measures. So after five years, people who won the lottery were more satisfied with their lives. And not only that, but the effect did not wear off over time. There was no evidence here.

VANEK SMITH: I knew it.


VANEK SMITH: I knew it.

GARCIA: There was no evidence. That hedonic treadmill is just stuck. You ran right...


GARCIA: ...Past it or whatever (laughter).

VANEK SMITH: Sitting in your, like, gold-plated lawn chair, contemplating life - so much better than sitting in your plastic lawn chair contemplating life.

GARCIA: Yep. And winning the lottery made them feel more satisfied for years and even decades after they won.

VANEK SMITH: But did it make people feel happier? And this is interesting because the answer is not really. In fact, the measured effect of winning the lottery on people's happiness was so small that Erik could not rule out the possibility that winning the lottery had no effect at all on how happy people feel. That makes me feel so much better about not having purchased a lottery ticket.

GARCIA: Other people's lack of happiness...


GARCIA: ...Makes you feel happy.

VANEK SMITH: (Laughter).

GARCIA: This is very interesting to me because it sounds like what you're saying is that if I look at my overall situation, I am a lot more likely to think that things are good because I've got more money. Maybe I have fewer stresses of having to pay bills. I'm not as worried about sending my kid to a good school or taking - or child care or things like that. But in, like, moment to moment, I'm not going to be in some elevated state of nirvana or happiness or whatever just because I won the lottery.

LINDQVIST: That's what we find. And we also find that if you look at other aspects of your life - so how satisfied you are with your friends, your family, society, these kind of things - that there's no effect on anything. It seems like the main driver of this increase in overall life satisfaction is due to, in effect, your financial life satisfaction.

GARCIA: What Erik is saying here is that the study also asked people how satisfied they were after winning the lottery with individual parts of their lives, how satisfied they were with their friends and family and society. The idea was to try to identify exactly which parts of their lives were causing their overall life satisfaction to go up. And it turned out that nearly all of their increased overall satisfaction was caused by feeling more satisfied with their financial situation.

VANEK SMITH: Although financial satisfaction doesn't feel like nothing.

GARCIA: It's - it obviously isn't in this case, yeah.

VANEK SMITH: But this is a really important point when you think about what happens to people who win the lottery. So remember; if you win the lottery, you get a choice. Either you can get paid out in smaller installments every year for, you know, decades like an annuity until you've received the whole jackpot, or you can be paid out in one lump sum all at the beginning.

GARCIA: And if you choose to accept the smaller installments every year, you won't be able to overspend all your new money and maybe even run out of money. I mean, we've all read those stories of people who go bankrupt after a few years once they win. So if you get paid in installments, at least you're guaranteed to still be richer over time because even if you blow all your money for one year, the next year you'll still get paid again. And so you remain satisfied with your financial life more than before you won at least. Erik actually doesn't buy that, though. He doesn't buy that you should necessarily take the installments instead of the lump sum.

LINDQVIST: So there is this very, very strong idea that you often hear, that people win the lottery, they just squander the money within a few years. So they just travel the world and spend all the money. And then they have no money left, and they're unhappy. We don't see that in our data. So when we look at how people spend the money, they seem to spread out how they spend this money over an extensive period of time. And this is also if they just won the lump sum price. So it doesn't seem to matter whether they win an annuity or a lump sum price. They spend it in a similar fashion. So this - our results goes against this idea that lottery winners just cannot handle their wealth.

GARCIA: Lump sum, Stacey - yea or nay?

VANEK SMITH: Oh, lump sum a thousand percent.

GARCIA: Really?


GARCIA: I think I...

VANEK SMITH: I will manage my own money, thank you very much.

GARCIA: (Laughter) I think I'd want to tie my own hands, to be honest...


GARCIA: ...Yeah, with the annuity. I think I'd want to do that. So there you have it - some usual caveats about drawing too many conclusions from just one study. This one did look at people who won lotteries worth several hundred thousand dollars, not people who won a $1.6 billion jackpot. That might be a totally different experience. And Erik also says that we don't know how much of the satisfaction we get from winning is because our absolute wealth level just went up versus the fact that we now have more money than other people, more relative wealth.

VANEK SMITH: I think that's the more important thing (laughter).

GARCIA: Well, it's hard to say 'cause when you win the lottery, they both go up. So we don't know.

VANEK SMITH: That's true. But overall, this study is just one more piece of evidence that winning the lottery will make you more satisfied with your life. And in fact, you will stay satisfied. And maybe now that we know this, Cardiff, we should go buy a Powerball ticket.


VANEK SMITH: Immediately.

GARCIA: That one's up to $750 million.


GARCIA: That sounds pretty good. Yep.

VANEK SMITH: We should - I mean, well, you know...

GARCIA: I don't know.

VANEK SMITH: ...Statistically it's a terrible idea. I'm very torn.

GARCIA: I'm a little tired. I'm going to get a coffee instead.

VANEK SMITH: (Laughter).

GARCIA: Finally, we just want to remind everybody that your chances of winning one of these massive jackpots are vanishingly small, all right? We don't give a lot of advice on this show, but we are comfortable enough saying that you should not spend money that you need for other things...

VANEK SMITH: Like coffee.

GARCIA: Yeah, or, you know, food and rent...

VANEK SMITH: (Laughter).

GARCIA: ...On lottery tickets. Don't do it. It's a bad bet.

VANEK SMITH: I feel like I can stand by that advice.



GARCIA: Hey, by the way, everybody, THE INDICATOR is looking for an intern. So if you're a recent college graduate and you might be interested, go to, and you can apply there.


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