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

Apouey, Bénédicte; Clark, Andrew

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

No 2009.96, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We use British panel data to explore 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 is largely exogenous. These positive income shocks have no significant effect on general health, but a large positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known status gradient in health 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 exogenous income is associated with greater risky health behaviours: lottery winners smoke more and engage in more social drinking. General health will pick up both mental health and the effect of these behaviours, and so may not improve following a positive income shock. This paper presents the first microeconomic analogue of previous work which has highlighted the negative health consequences of good macroeconomic conditions.

Keywords: Income; Self-assessed health; Mental health; Smoking; Drinking (search for similar items in EconPapers)
JEL-codes: D1 I1 I3 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-hea and nep-ltv
References: Add references at CitEc
Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2009.96

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