Bluefield Daily Telegraph, Bluefield, WV

Breaking News

Sister Newspapers' Blogs

November 19, 2012

Many lottery winners end up losing it all

By Don McNay

CNHI News Service

“Keep on working hard boy, try as you may, your going to wind up where you started from.”

-Cat Stevens

I stumbled upon a fascinating academic article, entitled "The Ticket to Easy Street? The Financial Consequences of Winning the Lottery".

It was written by three economics professors, Scott Hankins at the University of Kentucky, Paige Marta Skiba at Vanderbilt University, and Mark Hoekstra at the University of Pittsburgh.

The professors were not just looking to learn the habits of lottery winners. They were searching for the answer for a much larger question, “whether a bailout will have a permanent impact or whether it will merely postpone financial pain.”

In other words, does throwing money at people solve financial problems or just push them down the road?

The paper gives empirical proof two things that I've been saying for a long time: 1. Bailouts don't work. 2. People who get large sums of money run through it in five years or less.

The professors came up with an ingenious and comprehensive way to do their research. They obtained a list of Florida lottery winners of the Fantasy Five lotto game from April, 1993 to November, 2002.

They compared those names to Florida bankruptcy records to see how many of the winners filed bankruptcy and when.

Filing bankruptcy means a person has hit bottom. You wouldn’t expect that to happen to a lottery winner. Yet it does. Over and over again.

In the first couple of years after winning a jackpot, people who won small amounts were more likely to file than large winners. That makes sense. Someone with a large amount of money a winner can initially weather a bad time or keep creditors at bay.

After three years large winners are more likely to file bankruptcy than small winners. Also, people who received large sums did not use it to pay down debt or increase assets.

Text Only
Sister Newspapers' Blogs
Bill Archer
AP Video
SKorea Ferry Toll Hits 156, Search Gets Tougher Raw: What's Inside a Commercial Jet Wheel Well Raw: Erupting Volcanoes in Guatemala and Peru Raw: Cattle Truck Overturns in Texas New Pictures of Ship That Sank in 1888 Admirers Flock to Dole During Kansas Homecoming Video Shows Possible Syrian Gas Attack Cubs Superfans Celebrate Wrigley's 100th FBI Joining Probe of Suburban NY 'Swatting' Call U.S. Paratroopers in Poland, Amid Ukraine Crisis Alibaba IPO Could Be Largest Ever for Tech Firm Deadly Fungus Killing Bats, Spreading in US Oregon Gay Marriage Ban Goes to Court Swimmer Michael Phelps Attempts Comeback Raw: Obama Arrives in Japan for State Visit Raw: Violence Erupts in Rio Near Olympic Venue Motels Near Disney Fighting Homeless Problem US Reviews Clemency for Certain Inmates Raw: Pres. Obama Visits Japan's Imperial Palace Raw: Leopard Bites Man in India
Greg Jordan