Winning the lottery did not help people increase their net worth. They need to have set goals and an understand of finance to make their lives better.
Giving someone a lump sum does not make financial problems go away. It’s like putting an overweight person on a crash diet. Unless you can fix the underlying problem, they are going to fall back to their old habits.
This is true for lottery winner and the average American.
The paper makes reference to a 2007 study in the Journal of Political Economy, which said although “consumers initially used federal rebate checks to reduce debt, eventually debt levels returned to pre-rebate levels.”
Hankins, Hoekstra and Skiba concluded that “while we cannot be sure that homeowners or other beneficiaries of government aid would respond in the same way lottery winners did, the results may warrant some skepticism about the long term efficacy of such a bailout.”
You can see why bailout fail. Wall Street and lottery winners have a common bond. They have access to easy money without restraints.
In my experience with lottery winners, one of the biggest reasons for blowing their money is their family and “friends”.
The entourage hangs on until the money is gone. Once the party is over, they are nowhere to be found.
Wall Street has it’s own posse called Washington. The easy flow of campaign contributions, the revolving door between regulators and those they are supposed to be regulating, and the explosion of well connected, highly paid, lobbyists makes it impossible for Washington to tell Wall Street no.
There has been talk in Washington of another stimulus package. Instead of looking at short term solutions, the country needs to make long term, painful, economic changes.
Otherwise, like the Florida lottery winners, we are going to wind up where we started from.
Don McNay writes for the Richmond (Ky.) Register. CNHI News Service distributes his column.