Abstract

We estimate the medium- to long-term effects of substantial wealth shocks on life satisfaction and positive affect (“happiness”). Our estimation sample consists of 3,200 lottery winners who took part in a survey in the fall of 2016. We find positive wealth shocks lead to a moderate increase in life satisfaction but has no discernible effect on positive affect: A 1M SEK prize increases life satisfaction by 0.1 on a 1-10 scale, corresponding to 0.05 standard deviations. Analyzing subcomponents of life satisfaction, we find a significant effect on satisfaction with one’s financial situation, but no effect on other aspects of life.

 

 

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