By Melinda Carstensen
Money can't buy you love, but can it buy happiness? With U.S. lottery jackpots consistently being valued at hundreds of millions of dollars, it appears that many believe that is the case.
But is that the case? Curse of the lottery tales aren't hard to find. People like ex-con David Lee Edwards who won $27 million in 2001, lived a lavish lifestyle only to have his home foreclosed and his possessions sold at auction. Edwards died in 2013.
Despite these high-profile examples, recent studies suggest that most lottery winners do end up quite satisfied with their lives. The New York Times wrote this week about a survey of British lottery winners and how sudden wealth impacts psychological wellbeing.
In two separate studies, researchers interviewed participants annually about their feelings and life events. They found in one study that participants’ wellbeing decreased the year they won the lottery, and then improved over the next two years. Psychologically, they reported higher happiness levels than the general public and those who hadn’t won a large prize.
In the other study, researchers found people’s stress levels declined over two years as their positive feelings increased. Participants reported being psychologically better off at the two-year mark compared with how they felt prior to winning their prizes.
Those findings echo a 2010 study that shows an individual’s overall satisfaction of life can improve as his or her income increases. While day-to-day happiness levels off after a person earns $75,000 a year, individuals evaluated their lives more positively on the whole as their earnings increased.
The idea that winning the lottery could have an adverse effect on a person’s happiness in the short term, on the other hand, isn’t news. Experiences vary, but some lottery winners have shared horror stories about relatives and friends hounding them for cash. At the very least, experts say, winning a large sum of money can strain a person’s relationships.
“The problem with a big lottery win is that it adds a group of people to your life that you don’t want to be in contact with, and it disrupts the relationships with people you do want to be in contact with,” Michael I. Norton, a social psychologist at Harvard Business School, told the Times.
So, what’s the key to staying happy should you score a winning lotto ticket? Anonymity, Robert Pagliarini, a California-based financial adviser specializing in “sudden wealth” clients, says. He advises prizewinners not only keep their identities a secret, but to also plan for a trust or a company to hold their winnings.
Giving, not lending, money has similarly been shown to boost happiness. And spending money on experiences rather than material items is also key, as Norton explains in his book Happy Money: The Science of Smarter Spending.
“One of the most common things people do with their money is get stuff,” Norton says in the article “Want to Buy Happiness?” published in Forbes. “But we have shown … in research that stuff isn’t good for you. It doesn’t make you unhappy, but it doesn’t make you happy. But one thing that does make us happy is an experience.”