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

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  • Benedicte Apouey

    (Paris School of Economics)

  • Andrew E. Clark

    (Paris School of Economics and IZA Bonn)

Abstract

We use British panel data to explore 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 is largely exogenous. These positive income shocks have no significant effect on general health, but a large positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known status gradient in health in cross-section 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 exogenous income is associated with greater risky health behaviours: lottery winners smoke more and engage in more social drinking. General health will pick up both mental health and the effect of these behaviours, and so may not improve following a positive income shock. This paper presents the first microeconomic analogue of previous work which has highlighted the negative health consequences of good macroeconomic conditions.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.96.

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Date of creation: Nov 2009
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Handle: RePEc:fem:femwpa:2009.96

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Keywords: Income; Self-assessed health; Mental health; Smoking; Drinking;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Lottery wins and health
    by Economic Logician in Economic Logic on 2010-02-03 15:06:00
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Cited by:
  1. Martin Halla & Martina Zweimüller, 2011. "The Effect of Health on Income: Quasi-Experimental Evidence from Commuting Accidents," NRN working papers 2011-03, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria, revised Feb 2012.
  2. Fichera, E.; & Gathergood, J.;, 2013. "House Prices, Home Equity and Health," Health, Econometrics and Data Group (HEDG) Working Papers 13/01, HEDG, c/o Department of Economics, University of York.
  3. Nattavudh Powdthavee & Warn N. Lekfuangfu & Mark Wooden, 2013. "The Marginal Income Effect of Education on Happiness: Estimating the Direct and Indirect Effects of Compulsory Schooling on Well-Being in Australia," Melbourne Institute Working Paper Series wp2013n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  4. Djemaï, Elodie, 2010. "HIV-Related Risk Taking Behavior and Income Uncertainty : Empirical Evidence from Sub-Saharan Africa," Economics Papers from University Paris Dauphine 123456789/7310, Paris Dauphine University.
  5. Melissa McInerney & Jennifer M. Mellor & Lauren Hersch Nicholas, 2013. "Recession Depression: Mental Health Effects of the 2008 Stock Market Crash," CESifo Working Paper Series 4263, CESifo Group Munich.
  6. Gonzalez, Libertad, 2011. "The Effects of a Universal Child Benefit," IZA Discussion Papers 5994, Institute for the Study of Labor (IZA).
  7. Abigail Mcknight & Brian Nolan, 2012. "GINI Intermediate Report WP 4: Social Impacts of Inequalities," GINI Discussion Papers wp4, AIAS, Amsterdam Institute for Advanced Labour Studies.
  8. Jörn-Steffen Pischke, 2011. "Money and Happiness: Evidence from the Industry Wage Structure," CEP Discussion Papers dp1051, Centre for Economic Performance, LSE.
  9. Manuel Bagues & Berta Esteve-Volart, 2011. "Politicians' Luck of the Draw: Evidence from the Spanish Christmas Lottery," Working Papers 2011-01, FEDEA.
  10. Halla, Martin & Zweimüller, Martina, 2013. "The effect of health on earnings: Quasi-experimental evidence from commuting accidents," Labour Economics, Elsevier, vol. 24(C), pages 23-38.
  11. Maite Blázquez Cuesta & Santiago Budría, 2013. "Does income deprivation affect people’s mental well-being?," Banco de Espa�a Working Papers 1312, Banco de Espa�a.
  12. Luke Haywood, 2014. "Too Rich to Do the Dirty Work?: Wealth Effects on the Demand for Good Jobs," Discussion Papers of DIW Berlin 1355, DIW Berlin, German Institute for Economic Research.
  13. Powdthavee, Nattavudh & Boyce, Christopher J. & Wood, Alex M., 2011. "Can Money Change Who We Are? Estimating the Effects of Unearned Income on Measures of Incentive-Enhancing Personality Traits," IZA Discussion Papers 6131, Institute for the Study of Labor (IZA).

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