
Wealth, Health, and Child Development: Evidence from Swedish Lottery Players - gwern
http://qje.oxfordjournals.org/content/131/2/687.full
======
blfr
_our findings suggest that in affluent countries with extensive social safety
nets, causal effects of wealth are not a major source of the wealth-mortality
gradients, nor of the observed relationships between child developmental
outcomes and household income_

Pretty much the same as in the 19th century US:

 _Sons of winners have no better adult outcomes (wealth, income, literacy)
than the sons of non-winners, and winners ' grandchildren do not have higher
literacy or school attendance than non-winners' grandchildren. This suggests
only a limited role for family financial resources in the transmission of
human capital across generations and a potentially more important role for
other factors that persist through family lines._

[https://www.nber.org/papers/w19348](https://www.nber.org/papers/w19348)

~~~
mc32
You know, since lotteries are run by states, could they not somehow require as
a stipulation of taking the prize winners must also simultaneously and
compulsorily have to take financial planning education courses at an
additional 25% penalty for not attending, for winnings over double median
household income? Including lessons on rebuffing close and distant relatives.

~~~
nostrebored
This really assumes that financial planning is the issue. It's a symptom of
the problem. The winners of the lottery are ill equipped to pass on the life
skills for success, because generally they don't have them. While tons of
people gripe about the accumulated wealth of the upper class, there is some
socialization in upper class families that sets the children up to succeed --
it's not just an increased access to connections.

I say this as someone who lived in a four person family that lived on a single
welfare check for years. There is a huge cultural difference between those who
are systemically poor, situationally poor, and the upper class.

Learning upper class behaviors -- and unlearning my 'poor person' behaviors --
has had an immensely positive effect on my life and the way that I handle
situations.

~~~
grandalf
> There is a huge cultural difference between those who are systemically poor,
> situationally poor, and the upper class.

I'd be interested to read more of your thoughts on this based on your
observations.

~~~
nostrebored
Sure thing! I won't go too in depth, but I was just talking about this with my
wife a few days ago.

My dad came from a family of systemic poverty. Money was something to be
spent. Ironically, he was in charge of saving money for our family, which
understandably went poorly. He tanked nearly all of our money in the dot com
boom.

One of the biggest things that stands out to me in retrospect was how little
respect he had for his body, especially as a manual laborer. Rather than
trying to preserve the resource that he used to make money, he broke his back
(doing absolutely dumb things) twice. At this point he was functionally unable
to work, and became a stay at home parent because it was the only option left
to him. There was no backup plan. He'd dropped out of high school to go to
Vietnam, and hadn't saved money in a safe way in case of a catastrophe -- even
after one had already struck. Rather than a safe, well diversified plan, all
of our money that was not immediately spent was put into tech stocks. And then
the dot com bubble hit.

People who are systemically poor are more likely to be content with a good
gig, even if it is not sustainable. They are less likely to hedge against risk
in this situation as well.

This showed in other areas as well. For example, he'd lost all of his teeth by
40.

My mother on the other hand was situationally poor -- her father's family had
a good bit of money, but he passed away very young leaving her and her two
siblings with a single mother, who worked in public schools. My mom pursued a
degree in journalism, while her brother went into tech. While in school, she
dropped out to become an administrative assistant for a large uranium company
that was paying more than she was looking at as a journalism grad.

People who are situationally poor are willing to take low risk opportunities
with a good reward (take a job that pays more, leave school -- if it works
then that's great, if not then you head back to school with more money as a
buffer). They are less likely to make a career out of things that use your
body as a resource, as such careers are usually unsustainable.

Upper class people I've met are far more likely to take high risk
opportunities, even without a buffer. A decision my wife and I made that I
think is a more 'upper class' decision was moving to Seattle without much of a
financial buffer and no jobs, because we thought it had a very good chance of
being the best payoff for our degrees. It's a decision that has accelerated
both of our careers and earnings immensely.

Upper class people network. A lot. While they are born into connections, I'm
shocked at how few people (myself included) have not picked up the networking
skill.

Upper class people are also more likely to understand that their brain/body is
a resource that needs to be taken care of to have personal and economic
success. For instance, attitudes towards consumption of media, food, and
learning materials is something that is shockingly different.

There's a reason why when you read about the success that upper class people
have had, there's usually very little mention of television, and an extreme
amount of "i used to read a lot."

I considered myself to be someone who read a lot, and compared to my peers I
did, but when I'm hanging out with people who grew up in this culture, I'm
simply unable to keep up with the amount of references that they make.

There's more, but this has gone on for longer than I was expecting it to, and
of course it's all just my opinions and observations.

~~~
nibs
A follow-up to this that I thought was profound. I have told this story here
before but it really relates. I was once on a train in Europe and lucked into
an upgrade to first class. The food car was in the back and I wanted a
sandwich, so I walked through business and economy class to get food. In
business class, everyone without exception was reading non-fiction, news or
working on a laptop. When I walked through economy class, everyone was either
watching TV/Netflix, reading magazines or fiction. With one or two exceptions.
I thought it was a pretty profound difference that probably alone could
explain the inevitable income differences between who was sitting where. I
recognize that it makes sense those in business class would work, but... it
was Saturday.

~~~
sanoli
You got me curious as to what was being read/watched on first class.

~~~
nibs
Only a few of the fancy private cars but it seemed like people were just
hanging out talking to each other.

------
SamBam
This seems to be arguing that since sudden windfalls don't make people better
off, money is not the deciding factor in various markers of high quality
outcomes in life.

Yet there is a huge difference between someone who was born to "wealth" and
someone who won, our whose parents won, a lottery. And many of those
differences specifically relate to safeguards that protect and grow a wealthy-
person's wealth.

Various differences between the "wealthy"and those who just happened to come
upon a large windfall of money:

* The wealthy usually have an (often inherited) network of financial advisors, people investing their money, and lawyers, all of whom stand between them and bad decisions

* The wealthy are typically surrounded by a culture that has always been rich, so has always been able to afford universities and good health, and so can afford to value these highly

* The wealthy are usually surrounded by other wealthy people, who are not usually expecting (justly or not) financial favors (e.g. a brother who needs medical debt paid off)

* The psychological difference between growing up rich or working for a high salary, versus a sudden unexpected windfall our of the blue, must be immense.

Clearly there are differences between lottery winners and those who are wealth
by other means, so you can't take the former, see that their life outcomes
don't improve, and conclude that money over all doesn't have an effect on
these measures. Just that lottery money doesn't.

~~~
aab0
I think you've badly misunderstood the paper and its results and are taking
some sort of Occupy Wall Street mindset... The 'gradients' the paper is
talking about are not exotic gradients which apply only to the general
population vs the 1% of the 1% who get into an accident in their Lamborghini
and call their dad in the Bahamas who deploys a crack team of white-shoe
lawyers to ensure he never appears in court; it's talking about the health
gradients you see when you compare the first decile of income nationally to
the second decile, the second decile to the third, the fourth decile to the
fifth, and so on. (AFAIK, the Swedish administrative data doesn't even give
access to the 1% as they topcode or withhold access to their data.)

You see health differences no matter who you define as 'richer' or 'poorer',
throughout the general population, in ordinary people. Yes, in the normal
people you pass on the street, who have no 'financial advisors' other than
their uncle who has some hot stock tips (although I suppose he would count as
'inherited'), who have no 'people investing their money' unless they are
unusually prudent and have some Vanguard savings, who are not 'able to afford
universities and good health', and so on. The person making $5k a year is less
healthy than the person making $20k a year is less healthy than the person
making $50k a year, and so on. Where are the monocles and secret cultural
rituals there? None of these people 'grew up rich', so you should still see
benefits when the $20k person wins a few thousand bucks in the lottery, if the
causal effect here is through the money. But you don't.

------
ctoth
Scott Alexander wrote up a fantastic analysis of this and two more articles:
[http://slatestarcodex.com/2016/06/14/three-more-articles-
on-...](http://slatestarcodex.com/2016/06/14/three-more-articles-on-poverty-
and-why-they-disagree-with-each-other/)

------
kqr2
Related podcast: _Would a Big Bucket of Cash Really Change Your Life?_

[http://freakonomics.com/podcast/would-a-big-bucket-of-
cash-r...](http://freakonomics.com/podcast/would-a-big-bucket-of-cash-really-
change-your-life-a-new-freakonomics-radio-podcast/)

------
jbmorgado
I would expect this exact same outcome being Sweden. Being a country with a
very good social safety net and low income inequality it stands to reason that
a big increase in wealth wouldn't affect the health care and education of
children since that role is already well taken care of by society.

It would be more interesting to see this study in a county with low social net
and great income inequality like the USA or in a poor county.

------
RomanPushkin
TLDR?

~~~
david927
It's in the abstract of the paper, but essentially this is a study of Swedish
lottery winners which finds that winning the lottery doesn’t make them or
their children any healthier, better educated, or more pro-social.

