Lottery wins and health

Who has not dreamt of winning big at the lottery? Not only would one be able to afford all sorts of goodies, one would have less worries. This translates into better mental health and better physical health, knowing how the two are closely linked. It appears, however, that lottery winner do not enjoy better health. Why?

Bénédicte Apouey and Andrew Clark are not particularly interested in lottery winners, but studying them allows to understand the consequences of exogenous income changes on health. They use British data, which avoids the problems with US data, where income has a direct effect on health because of limited access to health care (and because also some lottery winners get murdered). But the problem is that lottery players have different characteristics to begin with. For example, they are less risk averse than others. This implies that they are also indulging in other risky behaviour, like drinking or smoking. Also, we all know lotteries are an institutionalized scam, so beyond being risk taking, lottery players must not be able to understand the consequences of playing. This impairment can have also implications regarding unhealthy behaviour.

So what do we learn from all this? These results are important in the context of the literature discussing more generally the consequences of income fluctuations (macro and micro) on health. The problem in this literature is that everything is endogenous and cannot properly be instrumented for. Thus the idea of using lottery winning, which should be exogenous. But as Apouey and Clark show, that only works if 1) one makes the distinction between physical and mental health, 2) one needs to take into account that lottery players have a different attitude with regard to health to begin with, 3) any aggregate comparisons are going to be fruitless. In other words, looking at lottery players is the wrong avenue unless you have a lot more information about them then we currently have.

PS: This is a FEEM working paper. FEEM specializes in environmental economics. I am still looking for a link between the topic of this paper and environmental economics.