Swedish study finds lottery lift lasts for life

A study of more than 3300 lottery winners found they were still psychologically better off many years after winning.

Stack of Australian Dollars. Australian money. $100 bill stacks. Thinkstock

They say money can’t buy happiness but in Sweden it has — and for life.

A study of more than 3300 lottery winners found they were still psychologically better off many years after winning prizes that ranged from the equivalent of $7000 to $800,000.

“Large prize winners appear to enjoy sustained improvement in economic conditions that are robustly detectable for well over a decade after the windfall,” the authors found. “It shows no ­effect of fading over time.”

The winners, who collectively won the equivalent of $US277 million across a range of Swedish lotteries, reported increased life satisfaction based on responses to self-reported levels of happiness compared with those of non-winners.

“We find no evidence that the effect varies by years since winning, suggesting a limited role for adaptation over the time horizon we analyse,” they write. Other studies had found that winners’ extra utility from a prize dissipated over time.

The study, titled Long-run Effect of Lottery Wealth on Psychological Wellbeing, looked at reported life satisfaction of winners between five and 22 years after winning. The greater the prize, the bigger in the increase in satisfaction they found.

“Estimates of the effect of wealth may help people who value subjective wellbeing make more accurate trade-offs between pecuniary and non-pecuniary aspects of life,” the study says.

They were also useful in shedding light on the costs and benefits of policies that involved “large, unconditional income transfers” because lottery winnings were “unearned” by comparison with ordinary household income, the authors said.

The study questioned the popular idea that lottery winners frivolously spent their winnings. “Previous analyses of Swedish Lotto winners have found little evidence of support of the hypothesis that winners often consume frivolously following a win,” the authors said, pointing to similar US evidence.

The study said a $100,000 prize was equivalent to an increase in net annual income of about $6000.

In Sweden, lottery winnings are tax-free, as in Australia.

The authors said their study wouldn’t resolve whether absolute or relative wealth mattered more because “a lottery prize causes both to increase”.