TONIGHT, UP TO half of all Australian adults will be gripped by the possibility of a win in the $200m Powerball draw, in what is the largest lottery in Australian history.
It’s fun to enter and dream about the ways in which you might spend the money should you win—quit your job, buy a super-yacht, frolic on it with supermodels, buy a castle, buy an island, buy an island with a castle, run for President etc.
It’s a pleasant reverie, although the chances of your numbers actually coming up are about as likely as Donald Trump discovering humility or 134 million to one, a statistic I’m inclined to meet with Han Solo’s defiant rebuttal of C-3PO’s unhelpful stat on the odds of surviving an asteroid field in The Empire Strikes Back: “Never tell me the odds”.
But let’s say fate, God or the universe smiles upon you and the ticket you bought in some random suburban newsagent contains the winning numbers. What would happen? Of course, your life would materially change. But would you be happier? The answer is probably, a little bit.
While there are often news reports about lottery winners who blew all their money—an American man’s daughter and granddaughter died of overdoses after he won $315 million in 2002, while another American (home of huge lotteries) won $21 million in 2001 and had blown it all within five years.
One of the main reasons for pessimism around lottery windfalls is due to a much cited 1978 study comparing the happiness of lottery winners, recently paralysed accident victims, and a control group. The researchers found that the lottery winners were only slightly happier than the control group and that the accident victims, while substantially less happy than the controls, weren’t as unhappy “as might be expected”.
The research is often used to support the theory of the ‘hedonic treadmill’ in which humans quickly adapt to new circumstances, whether it’s a positive development, like a financial windfall, or a negative one, like injury or illness. According to the theory, we inevitably return to our baseline level of happiness, which is a bummer if something great has happened to you, and cause for optimism and a testament to our capacity for resilience in the face of adversity, if something negative befalls you.
Two things: the sample size of the study—29 accident victims, 22 lottery winners, and 22 control-group members—was probably too small to draw conclusions. Secondly, researchers are less certain these days that the hedonic treadmill is as reliable an indicator of human behaviour as first thought. Subsequent research has shown positive life events, like say, marriage, can significantly improve your sense of wellbeing and negative events, like the death of a loved one, can irreparably alter your baseline happiness.
The old adage that money can’t buy you happiness is true enough, though. But what money can do is offer you the capacity to do things that can shift your life satisfaction in both positive and negative ways. On the positive side it can grant you financial security, which can alleviate stress and anxiety, though it may create its own new worries—which super yacht should I buy, I can’t decide.
But you could use your new-found wealth to fund positive activities, such as helping other people (a proven happiness booster), or taking soul-enriching holidays, furthering your education, or starting a charity. Of course, if you blow all your cash on frivolous, hedonistic pursuits, sketchy investment plans, gilded palaces or unsuccessful Presidential bids—looking at you Connor Roy–then you will probably be a little put out.
More recent studies have contradicted that 1978 study. A far more comprehensive one from the University of Warwick surveying 15,000 German households that included lottery winners, found winning the lottery improved the winners’ sense of overall life satisfaction. And the more they won, the more significant the positive effect.
Another study, from 2020, by researchers from Stockholm University, Stockholm School of Economics, and New York University, surveyed 3,000 Swedish lottery winners about their psychological wellbeing between five and 22 years after they won the lottery. Again, lottery winners experienced “sustained increases in overall life satisfaction.” These positive effects remained strong for over a decade.
Notably, there was no evidence that winners blew their newfound wealth on extravagant purchases (like super yachts) and instead maintained a steady cash outlay over a number of years. Most kept working, though they usually did less hours than previously. The winners had more and higher-quality leisure time, which enhanced their sense of wellbeing.
“We find that winning large sums of money strongly affects how content you are with your personal finances. But it does not affect how you feel about other aspects of life, such as your health, or your relationships with friends and family,” said Erik Lindqvist, one of the researchers behind the study.
The bottom line here is that the bottom line is important, because while an influx of cash may not directly impact your happiness, it certainly has the capacity to improve your overall life satisfaction. Money is a tool. It’s up to you to make it a useful and productive one.