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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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  1. Kuhn, Peter J & Kooreman, Peter & Soetevent, Adriaan & Kapteyn, Arie, 2008. "The Own and Social Effects of an Unexpected Income Shock: Evidence from the Dutch Postcode Lottery," University of California at Santa Barbara, Economics Working Paper Series qt07k895v4, Department of Economics, UC Santa Barbara.
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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. John Gathergood & Eleonora Fichera, . "House Prices, Home Equity and Health," Discussion Papers 12/07, University of Nottingham, School of Economics.
  2. Djemaï, Elodie, . "HIV-Related Risk Taking Behavior and Income Uncertainty : Empirical Evidence from Sub-Saharan Africa," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/7310, Université Paris-Dauphine.
  3. 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.
  4. Manuel Bagues & Berta Esteve-Volart, 2011. "Politicians' Luck of the Draw: Evidence from the Spanish Christmas Lottery," Working Papers 2011-01, FEDEA.
  5. Libertad González, 2011. "The Effects of a Universal Child Benefit," Working Papers 574, Barcelona Graduate School of Economics.
  6. 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.
  7. Pischke, Jörn-Steffen, 2011. "Money and Happiness: Evidence from the Industry Wage Structure," CEPR Discussion Papers 8409, C.E.P.R. Discussion Papers.
  8. 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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