Winning is just the beginning, but how it will affect your life?
Winning $15,000 a year for 20 years - no major effect on your life. Winning $80,000 a year for 20 years - would affect your labor force participation, automobile expenditures, the value of the home you own, and your savings.
How much would your life change if you won a substantial lottery prize?
According to a study by Guido W. Imbens, Donald B. Rubin and Bruce Sacerdote:
"Winning $15,000 a year for 20 years would not have a major effect on your life. However, if you instead won $80,000 a year for 20 years, it would affect your labor force participation, automobile expenditures, the value of the home you own, and your savings."
"A prize of $15,000 a year had little effect on the labor supply of the winners. However, they also found that winning $80,000 rather than $15,000 reduced labor supply significantly. Additionally, estimates by Imbens, Rubin and Sacerdote indicated that, in this case, car values rose (by at least $5,500 on average), home values increased (by $30,000 on average), and savings went up (especially in the form of bonds and mutual funds)."
Source: Bureau of Labor Statistics
Evidence from the Survey of Lottery Players by Guido W. Imbens, Donald B. Rubin and Bruce I. Sacerdote indicates:
"We find that unearned income reduces labor earnings, with a marginal propensity to consume leisure of approximately 11 percent, with larger effects for individuals between 55 and 65 years old. After receiving about half their prize, individuals saved about 16 percent."
Source: American Economic Review
Camelot Group Plc, operator of The UK National Lottery, has released the first ever major survey of National Lottery winners to discover what effect the lottery really has on happiness, lifestyles and relationships. The survey gives a uniquely historic insight into the lives of Lottery winners over the last several years. Below is the summary of the article.
55% - are happier after winning
43% - no affect on happiness
2% - are less happy
"The happiness of the winner is not affected by the size of his or her win."
Of the 55% of winners who are happier:
65% - claimed the reasons are improved financial security and fewer worries
23% - say they can buy what they want and that life is a lot easier.
There are no negative effects on family life or friendships:
95% - remained married after winning
100% - who were living with a partner prior to their win (but not married), are still in the same relationship (whether now married or not).
Increased happiness of winnersí families is dependent on the size of their relativeís win.
58% of winners of £250k or more state that their family is happier.
37% of winners of £250k or less state that their family is happier.
The main reason for improved family happiness is increased financial security (34%).
83% - have given some of their winnings to their family.
66% - have given money to their siblings
57% - have given money to their children
51% - have given money to their parents.
"The findings also indicate that the larger the win, the more likely that the winnerís family will ask for money."
17% - of families asked for winnings from winners of £50k-£250k,
29% - of families asked for winnings from winners of £2m+.
90% of winners who already had a best friend before winning are still best friends with the same person.
Men give money to three friends.
Women give money to one friend.
The lifestyles of many Lottery winners have changed significantly.
40% increased contributions to charity.
19% of winners went on holiday abroad for the first time.
12% of winners have still not been abroad.
7% of winners say a caravan is one of their major purchases.
40% of winners have moved since their win.
Of those who have moved 75% now live in detached houses.
"Most of those who have moved have not moved far Ė an average of nine miles."
26% of winners of large amounts often own more than one home and 25% of those own a property abroad.
10% of winners have switched to private medical care.
1% has had plastic surgery.
3% have moved their children from state schools to private schools.
84% of winners have not taken up any new hobbies since their win.
12% of winners have joined health clubs.
32% of all winners state they have gained weight since their win.
14% lost weight.
44% of their winnings were spent after 5 years
37% of winners still buy supermarket own brands, regardless of the size of the win.
4% claim to have switched from buying supermarket brands to individual brands.
48% of winners who were in regular work before their win are still in the same job.
27% of winners of elevated amounts are still in the same job.
56% of winners of more than £1m have given up work.
15% have started a new job since their win.
45% of those have started their own business.
"Winning the Lottery appears to have very little impact on the winnersí perception of their social class or their political
52% of winners of £2m+ consider themselves to be working class, compared with 60% before their win.
88% of lottery winners still participate in the lottery every week.
2% have stopped playing altogether.
Study by Dr. H. Roy Kaplan:
Winning the lottery had little adverse impact on the work habits.
"A study of lottery winners by Dr. H. Roy Kaplan of the Florida Institute of Technology revealed that winning the lottery had little adverse impact on the work habits of lottery winners. A recent study of 39 lottery winners from Roby, Texas supported Dr. Kaplanís findings."
Source: The Institute for Socioeconomic Studies
According to Dr. H. Roy Kaplan author of several books on lottery winners, "winning the lottery doesn't change people's lives as much as is imagined."
"You can catapult people from one economic status to another overnight, but a lifetime of beliefs and experiences change more slowly. People who were outgoing and gregarious before winning took it in stride," Kaplan said. "People who were shy and withdrawn before winning became suspicious and paranoid."
Most lottery winners keep their jobs, but find their relationship with co-workers changed. Most are inundated with requests for money, both from friends and strangers.
Money doesn't change a person's level of happiness, said Kennon Sheldon, a psychologist at the University of Missouri at Columbia. "We
consistently find that people who say money is most important to them are (the unhappiest)," Sheldon said.
Source: Gaming magazine
"42% percent of Americans would keep their current job even if they won at least $10 million in the lottery, said Nancy Bunn, spokeswoman for Burke Incorporated of Cincinnati, the contractor that conducted the survey. The percentage of would-be lottery winners that would keep their jobs was even higher among respondents older than 45."
Source: ABC News
Nearly one-third of lottery winners become bankrupt.
"The CFP Board made an offer to the National Association of State and Provincial Lotteries to provide the organization's members with information to distribute to winners. The Investment News article highlighted the lack of financial guidance many winners receive from state lottery agencies; estimates show that nearly one-third of lottery winners become bankrupt."
Source: Certified Financial Planner Board of Standards, Inc
Wealth brings unhappiness.
"A new study by American psychologists has found that cash and popularity do not bring nirvana. Experts say that excessive wealth, particularly for people unaccustomed to it, such as lottery winners, can actually cause unhappiness.
There is evidence that there are very wealthy people who are very unhappy, particularly people who were not born to wealth like lottery winners."
Source: BBC News
An interesting study by Brickman, Coates and Janoff-Bulman:
"The researchers studied both lottery winners and individuals that sustained a physical injury, to determine if winning the lottery made them happier or if sustaining an injury made them less happy. What they found was that immediately after either event, levels of happiness were higher (lottery winners), or lower (physically injured), and that after eight weeks or less, people returned to the level of happiness they had before the event. This research suggests that we adapt to these situations very quickly, and often return to the degree of happiness we had before such an event."
Source: University of California
A San Francisco Chronicle article titled "Big lottery winners know a lot about what not to do" states:
"The newly wealthy spend most of their first $1 million on travel."
"Research shows that a significant number of lottery winners lose their winnings within five years, said Stephen Goldbart, a psychologist and co-director of the Money, Meaning and Choices Institute in Kentfield, which advices people who come into financial windfalls."
"We've seen people who had decent marriages who came into money and it destroyed the marriage. Bringing a huge amount of money into the scene is a life-changing event," Goldbart said."
"A hermit drank himself to death just two years after winning $2.57 million (1.8 million pounds) in the lottery."
"Tom Grey, spokesman for the National Coalition against Legalized Gambling, said Virginia state lottery officials found in 1999 that of 300 millionaire winners, as many as 60 eventually encountered financial problems."
Source: San Francisco Chronicle
"Researchers have identified many elements that people report wanting that don't really bring lasting happiness once obtained. For instance, there are interesting data on the clinical depression of megabuck lottery winners, or that the reported happiness of the rich is not significantly higher than the average person's. Apparently, large amounts of wealth, fame, power, sex, and prestige do not bring above-average happiness over time."
According to ABC's John Stossel, "Studies of lottery winners found that within a year, most say that they are no happier than they were before they won."
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