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

45 Pages Posted: 30 Nov 2009 Last revised: 8 Jan 2014

See all articles by Bénédicte Apouey

Bénédicte Apouey

CNRS; Paris School of Economics (PSE)

Andrew Clark

Paris School of Economics (PSE); IZA Institute of Labor Economics

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Date Written: January 7, 2014

Abstract

We use British panel data to determine 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 by winners is largely exogenous. Positive income shocks have no significant effect on self-assessed overall health, but a significant positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known gradient in health status 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 lottery winnings are also associated with more smoking and social drinking. General health will reflect both mental health and the effect of these behaviours, and so may not improve following a positive income shock.

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

JEL Classification: D1, I1, I3

Suggested Citation

Apouey, Bénédicte and Clark, Andrew Eric, Winning Big but Feeling No Better? The Effect of Lottery Prizes on Physical and Mental Health (January 7, 2014). Available at SSRN: https://ssrn.com/abstract=1515814 or http://dx.doi.org/10.2139/ssrn.1515814

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Andrew Eric Clark

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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