The Lottery and Happiness

The recent news of Missouri grandparents winning a whopping $294 million dollars is hard for us Aussies to understand given we are only used to hearing lottery figures of $40 or $50 million or so. But whilst none of us would knock this money back it is necessary to ask how much happiness it would buy us.

Before asking how do lotto winners fare, the more important question should be; how do lotto ticket purchasers fare? Well its an incredibly lousy bet for starters. In fact you are probably better off playing the roulette tables at a casino. According to this New York Times piece

But it’s not. On the contrary, lotteries may well be the single most insidious way that state governments raise money. Many of the people who buy lottery tickets are poor; lotteries are essentially a form of regressive taxation. The odds against winning a big jackpot are astronomical — far worse than the odds at an Atlantic City slot machine. The get-rich-quick marketing — by government, let’s not forget — is offensive. One New York Powerball ad shows a private jet emblazoned with the words “Kevin’s Airline.” The tag line reads: "Yeah, that kind of rich."

 What about those who win?

Oh, and let’s not forget the fate of the people who win. They may be “that kind of rich” on the day they hit the jackpot, but, more often than not, they don’t stay that way. People who suddenly fall into extreme wealth — whether because of an insurance settlement, a professional sports contract, or a lottery win — rarely know how to handle their new circumstances.

There is, to take one of the most prominent examples, the story of Jack Whittaker, a West Virginia businessman who won a $315 million Powerball jackpot in 2002. A decade later, his daughter and granddaughter had died of drug overdoses, his wife had divorced him, and he had been sued numerous times. Once, when he was at a strip club, someone drugged his drink and took $545,000 in cash that had been sitting in his car. He later sobbed to reporters, “I wish I’d torn that ticket up.”

I read about Whittaker, and a host of other sad stories about lottery winners, in a recent e-book written by Don McNay entitled, “Life Lessons From the Lottery.” McNay is a financial adviser and newspaper columnist, based in Kentucky, whom I’ve gotten to know over the years. He specializes in helping people who have come into sudden money. He is convinced that the vast majority of people who win big-money lotteries, like the recent Powerball prize, wind up broke within five years. “The money just overwhelms them,” he told me the other day. “It just causes them to lose their sense of values.”

Lesson learned? Happiness must be earned. People don't get happy when they are given things on a plate, whether its lottery winning or government handouts. According to some studies many of the things that make us the most happy are the little pleasures in life and times of extreme joy or tragedy in our lives often snaps back to equilibrium after a short while;

In recent years, cognitive scientists have turned in increasing numbers to the study of human happiness, and one of their central findings is that we are not very good at predicting how happy or unhappy something will make us. Given time, survivors of tragedies and traumas report themselves nearly as happy as they were before, and people who win the lottery or achieve lifelong dreams don't see any long-term increase in happiness.

As the great thinker Adam Smith put it;

“the mind of every man, in a longer or shorter time, returns to its natural and usual state of tranquility. In prosperity, after a certain time, it falls back to that state; in adversity, after a certain time, it rises up to it.”

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