The Powerball jackpot jumped to a record $550 million Wednesday. Although the odds of winning it are only about 1 in 176 million, there is an upside for those who end up with a losing ticket: Studies show that most lottery winners don’t end up any happier than the rest of us.
Indeed, numerous psychology studies into the happiness of lottery winners over time have found that once the initial thrill of winning fades away, most winners actually are no happier than they were before hitting the jackpot.
Perhaps the most famous paper on this subject, published the late 1970s, discovered that in terms of overall happiness, lottery winners were not significantly happier than the non-lottery winners.
Interestingly, they also found that lottery winners took “significantly less pleasure” in the simple things of life – such as chatting with a friend, reading a magazine or receiving a compliment – than non-winners did.
“Humans tend to have a relatively set point of mood,” explains Gail Saltz, a New York City psychiatrist and frequent contributor to the TODAY show. She says that most people tend to bounce back to that set point after a major life event, whether it’s something negative or positive. For some lottery winners, however, psychologists believe hitting an especially huge jackpot may alter that happiness baseline; thus, making it harder to see the joy in everyday things.
More recent research includes a 2008 University of California, Santa Barbara, paper that measured people’s happiness six months after winning a relatively modest lottery prize – a lump sum equivalent to about eight months’ worth of income. “We found that this had zero detectable effect on happiness at that time,” says Peter Kuhn, one of the study authors and a professor of economics at the university.
Certainly one jackpot winner agrees. In an interview on the TODAY show in December 2002, Andrew Jackson “Jack” Whittaker Jr. said that in his darkest moments he sometimes wondered if winning the nearly $315 million Powerball game was really worth it.
Whittaker initially gave millions to charities, including $14 million to start his own Jack Whittaker Foundation, but his dream later turned into a nightmare when a briefcase with $545,000 in cash and cashier’s checks was stolen from his car while it was parked outside of a strip club. His office and home were also broken into, and he was arrested twice for drunken-driving.
Then there’s Alex Toth, a Florida man won $13 million in 1990, with $666,666 to be paid to him annually for 20 years. When he died in 2008, the Tampa Bay Times reported on the sad direction his life had taken after winning the lottery and living it up, which led to a split from his wife and charges of fraudulent tax returns, as well as other serious problems.
While everyone reacts differently to a sudden increase in cash flow, it can be difficult to predict how happy more money is going to make us. Nevertheless, money can make you happy, but only up to a point.
“Research shows that the impact of additional income on happiness begins to level off around $75,000 of income, but people keep trying to make more and more money in the mistaken belief that their happiness will continue to increase,” says Michael Norton, associate professor at Harvard Business School. “As a result of this mistaken belief, people think that big windfalls will change their happiness dramatically, and may end up with less happiness than they expected,” says Norton, who co-authored a 2007 paper in an effort to find why hitting major life goals, including winning the lottery and getting married, don’t end up making us as happy as we expect them to.
On the other hand, coming into money that lifts you out of financial hardship really can provide significant, lasting happiness. Just ask Sandra Hayes, who was a 46-year-old social worker making $25,000 a year when she and 12 of her coworkers won the $224 million Powerball jackpot. After taxes and splitting the money with her coworkers, Hayes took her share of $10 million and bought her dream car (a brand-new Lexus) and her dream home (a half-million dollar house in St. Louis). But first, she paid off her current home and then gave that house to her daughter and grandchildren, who’d been living in a rough neighborhood. She quit her job and now spends her days writing. She’s already published one book and is working on a second one.
“Yes, my life is different, and it feels good,” says Hayes. “This summer I had a $900 water bill. Six years ago, well, if I had a substantially huge bill, I would’ve had to make payment arrangements. That’s one of the things I like, that I’m able to pay my bills in full and not scuffle.”
The first secret, as Hayes tells it, to winning the lottery without losing your mind is to immediately meet with a financial planner you trust and make a plan that works for you. The second is a little simpler. She says, “Just because you win the lottery, it does not change you as a person.”