"70% of Winners Go Bankrupt"... Do You Believe in the Lotto Curse? [Curiosity Lab]

1 in 8 Million Chance? Feelings Are "50-50"
Most Curses Originate from Ruinous News
Studies Claiming Bankruptcy Means Misery Have Many Flaws
Recent Research Shows "Increased Life Satisfaction"
Money ≠ Happiness but Money = Convenience

The probability of winning the first prize in the lottery is roughly 1 in 8 million. Considering that the population of Seoul is 9 million, it is like throwing a stone from the sky over Seoul and hitting a target. Since a 2kg bag of rice contains about 7 million grains, it is like spreading out all the rice grains and picking just one. This shows how slim the chances of winning are. However, for those who buy lottery tickets, the perceived probability of winning is 50%. It’s simply a matter of whether they win first prize or not. Everyone imagines what it would be like if they won the first prize while buying a lottery ticket. This happy imagination lasts until Saturday evening (the lottery drawing day). Among various imaginations, one is "Will I also suffer from the lottery curse?" The lottery curse refers to squandering the prize money recklessly, becoming enemies with family, relatives, and friends due to the huge winnings, and ultimately ruining both body and mind, leading to financial and personal ruin.

The lottery curse and the belief that winning the lottery leads to ruin have existed for a long time. Why is that? There are three sources. First, negative news related to winners, their families, and surroundings. Stories of winners living ordinary lives or successfully investing to grow their wealth do not attract attention and the winners themselves do not come forward, so such news rarely appears. On the other hand, others’ misfortunes have high news value. A representative example is a 70-year-old mother in 2016 who held a one-person protest claiming her son, who won 4 billion won in the lottery, did not support her. She was thought to be an ungrateful person blinded by money. However, the son had already bought a house for her to live in, and the drama unfolded as the sisters threatened and trespassed demanding a share of the winnings. In 2003, a man who won the second-largest lottery prize of 24.2 billion won (net amount 18.9 billion won) lost everything within five years after dabbling in stocks, real estate, and investments. He even went into debt and committed fraud, making headlines. There have been cases of suicide due to business failure. Stories also include a friend who ran away with a lottery ticket won by another friend, and a wife who suddenly changed after claiming the prize on behalf of her husband who bought the ticket but had no ID.

The second source is statistics and research. Among frequently cited claims domestically and internationally are "70% of lottery winners go bankrupt within a few years of winning" and "lottery winners are less happy than accident victims." One is false and the other is full of flaws. The ‘70% bankruptcy statistic’ cited from the U.S. originated from a 2001 symposium hosted by the National Endowment for Financial Education (NEFE), but it is a superstition with no credible source or reliability. A 1978 study comparing lottery winners and accident victims surveyed only 22 and 29 people respectively, making the sample size too small and the study flawed.

What about reliable research results? The conclusion is that winning the lottery increases happiness. A 2019 study conducted by researchers from the University of Warwick and the University of Zurich analyzed 617 households that won substantial amounts (from thousands to millions of euros) and concluded that lottery winnings improved overall life satisfaction. The greater the prize money, the stronger the positive effect. In 2020, Stockholm University, the Stockholm School of Economics, and New York University surveyed 3,000 Swedish lottery winners about their psychological well-being 5 to 22 years after winning. Similar to previous research, the researchers concluded that "lottery winners experienced a sustained increase in overall life satisfaction." They found that this effect lasted more than 10 years with no evidence of fading over time.

'A small luxury for myself' Citizens are waiting to purchase lottery tickets.

The researchers also found no evidence that winners squandered their wealth on luxury. Instead, winners tended to spend their prize money slowly over several years. Most did not quit their jobs but tended to work less. After winning the lottery, leisure time increased in quantity and quality, which contributed to increased happiness. In conclusion, winning the lottery is generally a very good thing. Stories of lottery winners whose lives were ruined by sudden wealth do not represent the experience of most winners.

The third source is what countless scholars say: "Money and happiness are not proportional," or "Happiness does not come from material wealth." This is true. One can be unhappy despite having a lot of money, and happy despite having little. A life chasing only money is problematic. The issue is the difference in convenience. Without money, there are many inconveniences and considerations. Moreover, in Korea, even winning the first prize in the lottery, which averages about 2 billion won, is just enough to buy an apartment in Gangnam. It is not enough to change one’s life drastically or cause fierce conflicts leading to ruin. Since so many people buy lottery tickets, the prize money rarely rolls over. As the government says, the happy imagination gained from buying lottery tickets builds immunity.