Gardner and Oswald made these observations after studying data collected as part of the British Household Panel Survey, a project based on yearly interviews with the same sample of over 10,000 people, conducted since 1991. The researchers had access to the participants’ lottery winnings and to their annual scores on a measure of psychological well-being called the ‘General Health Questionnaire’, which features items like “Have you recently felt under constant strain?” or “Have you recently been feeling unhappy and depressed?”.
One hundred and sixteen participants had had a win of over £1000, and changes in their psychological well-being were compared with 2943 winners of prizes smaller than £1000, and with 9677 people who had no win at all.
There were no well-being differences between groups in the year after a win. But two years after a win, those participants who’d won a medium-sized prize showed a positive change in psychological well-being of 1.22 points compared with two years prior to their win. The small prize winners and non-winners, by contrast, actually showed a drop in psychological well-being of 0.18 points over the same time period, so there was a relative difference between the groups of 1.4 points.
But what do these point differences mean in real life? Gardner and Oswald said earlier research had found being widowed was associated with an average drop in well-being of 5 points on the same measure, leading them to conclude the 1.4 point positive change enjoyed by medium-sized winners was worth writing home about – or in their words: “economically significant and not merely statistically significant”.
Gardner, J. & Oswald, A.J. (2006). Money and mental well-being: A longitudinal study of medium-sized lottery wins. Journal of Health Economics, In Press.
Link to related study by Nobel-prize winner Daniel Kahneman.
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