Falling (rising) incomes and personal irresponsibility, on recent Charles Murray debates

Let’s turn the mike over to Alex, our Alex, the Alex, etc., the one who writes for MarginalRevolution:

The rags to riches to rags story of a poor, unemployed fellow who wins the lottery, blows the cash, and ends up just as poor and unemployed as he began is a common trope.  (Here is a classic in the genre). In a paper just published in the Review of Economics and Statistics (gated, free version here), Hankins, Hoekstra and Skiba argue that the rags to riches to rags story has a systematic component.

The authors link records of lottery winners to bankruptcy records. The use of the lottery is a great randomization device, although obviously it restricts the sample to people who play the lottery.

The central finding is this: people who win large amounts are just as likely to end up bankrupt as people who win small amounts…

Here is more, hat tip goes to Slocum.

Addendum: Floccina writes in the comments: “Former professional athletes are also an interesting case.”  Are the economic variables really driving the dysfunctional social norms, or vice versa, or most likely quite a bit of both?