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Winning big but feeling no better? The effect of lottery prizes on physical and mental health

Apouey, Bénédicte and Clark, Andrew E. (2013) Winning big but feeling no better? The effect of lottery prizes on physical and mental health. CEP Discussion Papers, CEPDP1228. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP1228

Abstract

We use British panel data to determine the exogenous impact of income on a number of individual health outcomes: general health status, mental health, physical health problems, and health behaviors (drinking and smoking). Lottery winnings allow us to make causal statements regarding the effect of income on health, as the amount won by winners is largely exogenous. Positive income shocks have no significant effect on self-assessed overall health, but a large positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known gradient in health status 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 lottery winnings are also associated with more smoking and social drinking. General health will reflect both mental health and the effect of these behaviors, and so may not improve following a positive income shock.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2013 The Authors
Subjects: H Social Sciences > HG Finance
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics
I - Health, Education, and Welfare > I1 - Health
I - Health, Education, and Welfare > I3 - Welfare and Poverty
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 08 Aug 2013 11:53
Last Modified: 09 Aug 2013 09:14
URI: http://eprints.lse.ac.uk/id/eprint/51570

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