Does money make lottery winners more right-wing?

by on February 10, 2014 at 3:22 pm in Economics, Education, Political Science | Permalink

Lottery winners tend to switch towards support for a right-wing political party and to become less egalitarian, according to new research on UK data by Professor Andrew Oswald of the University of Warwick and Professor Nattavudh Powdthavee of the London School of Economic and the Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

Their study, published as a new University of Warwick working paper under the title “Does Money Make People Right-Wing and Inegalitarian: A Longitudinal Study of Lottery Wins”, shows that the larger the win, the more people tilt to the right. The study uses information on thousands of people and on lottery wins up to 200,000 pounds sterling. The authors say it is the first research of its kind.

The article is here, via Charles Klingman.

ac February 10, 2014 at 3:27 pm

Does suddenly losing a job/becoming poor make people more left-wing?

(We all know the answers to these questions; incentives et al)

Hopaulius February 11, 2014 at 1:10 am

There is no such thing as “left-wing.” The only categories are “normal, rational lovers of the common good” and “right wing extremists.”

So Much For Subtlety February 11, 2014 at 4:47 am

I am not sure we do know the answer to those questions. Take the inflation of the inter-war period. German and Hungarian inflation destroyed the savings of the middle class. As did both being punished for being aggressor nations which was a little tough in the case of Hungary. They both had Communist uprisings. Both failed. They both chose Fascism of one sort or another.

So are they choosing left wing politics or not? Hard to say really.

Latin America also did this experiment. They may or may not have supported military dictatorship in some places. They do seem to have voted liberal (in the classical sense) in Brazil in order to control inflation.

Jon February 11, 2014 at 7:32 am

Germany chose facism in 1932, after the deflation of 1931. The hyperinflation was in 1923

Mondfledermaus February 11, 2014 at 12:08 pm

The military regimes of South America don’t have nearly as good record on fighting inflation.that you seem to suggest.

Tom February 10, 2014 at 3:31 pm

I would think the largest winners, at least, would jump to the Tea Party. Obviously, we need to get a greater share of the country’s wealth into higher income people, as they are obviously more productive.

Doug February 10, 2014 at 4:18 pm

Hey, isn’t it great we can just argue with strawman characterizations of what our political enemies believe!

Alistair February 11, 2014 at 12:52 am

Arguing a strawman makes me think it less likely that your own case is true.

TallDave February 11, 2014 at 4:53 am

You may want to check into the proportion of high income earners who are lottery winners.

Also, around half of lottery winners end up bankrupt within several years, so presumably they can head back to OWS at that point claiming the banks stole their money.

Z February 10, 2014 at 3:36 pm

Yet, the richest congressional districts in the US are the most liberal. But hey, let’s keep pretending the Left is looking out for the workin’ man. That’s why the Democratic Party has to hold bake sales to raise enough money to pay rent. What a bunch of nonsense. Liberalism has always been a religion of the rich. Just take a gander at the roster of New Left leaders in the 1960′s. You don’t find too many horny handed sons of toil.

Doug February 10, 2014 at 4:14 pm

The sizable majority of lottery winners aren’t rich enough to be “elite.” A lottery winner may get a big lump in the bank, but they still have no human capital (as well as probably not the best financial acumen). A $20 million jackpot gives you about $8.6 million after taxes and if you take the lump sum. Amortized at 7% return on investment and 2% inflation over 30 years earns you about $500k a year. That’s pretty good, it puts you in the upper end of corporate lawyers and the middle to upper end of doctors. But it’s nowhere near high enough to have you rubbing shoulders with the Manhattan or Beverly Hills elite that form the core of “limousine liberals.” And most lottery jackpots are less than $20 million.

I happen to know a family of lottery winners (who also happen to be very conservative). Smartly they invested the money instead of blowing it all at once. They’re solidly upper-middle class surbubanites who focus on their kids, light work to keep busy and golf. Pretty much what you’d expect from the core of the Tea Party.

Z February 10, 2014 at 4:34 pm

You’re missing my point, or perhaps I’m reading too much into the story. To me, it starts with the loopy idea that all rich people wear top hats, grouse about the poor and want to shutter the welfare state. Therefore, getting rich turns one into one of these imaginary meanies that haunt the dreams of lefty faculty members. Frankly, as soon as I see the term “right-wing” I assume I’m dealing with a lefty crank.

But as I said, I may misinterpreting the story.

msgkings February 10, 2014 at 4:42 pm

So T Shaw is a lefty crank? See his post below….

Doug February 10, 2014 at 5:39 pm

I understand your point: among rich people, especially the very rich, leftism is even more common than among the general population. But my implicit point is that leftism is also more common among the working and lower-middle class than it is among the middle and upper-middle class. Not everyone voting Democrat is a millionaire, and the most solidly blue income brackets are also the lowest ones. Leftism, at least as its practiced in the developed West, is the bottom and top against the middle.

Going back to lottery winners, I don’t think the premise is so ridiculous that they’d become more right-wing. Most lottery winners aren’t middle class people moving into the realms of the elite rich. On the contrary most lottery winners are working and middle-lower class people (who disproportionately play) moving into the solidly comfortable upper-middle class. And that’s a move that’s entirely demographically consistent with moving from Democrat to Republican.

msgkings February 10, 2014 at 6:04 pm

I pretty much agree with this post but the study in question only goes up to 200K pounds of winnings…not enough to move you from one ‘class’ to another.

Doug February 10, 2014 at 7:22 pm

Oh whoops, that’s what I get for not reading the post carefully…

Ricardo February 10, 2014 at 11:08 pm

“among rich people, especially the very rich, leftism is even more common than among the general population.”

Surveys that attempt to reach the top 1% of Americans by wealth and income do not bear this out: http://fivethirtyeight.blogs.nytimes.com/2011/12/14/the-politics-of-the-1-percent/

Andrew Gelman makes a great point about this stereotype of rich liberals. The reason it persists so much among political pundits is that pundits overwhelmingly live in D.C. or New York which are precisely the enclaves that rich American liberals gravitate toward. Even Manhattan has its rich Republicans though; the Upper East Side of Manhattan is a top fundraising area for both political parties. Rich people in New York or D.C. are not, however, representative of rich Americans overall and an unbiased sample of at least the top 1% would show that a majority are Republican voters with economically conservative views.

Joe February 11, 2014 at 5:55 am

The problem with right-wing cranks like Z is they never allow facts to get in the way of their ideology. The way they do this is by assuming that the facts always fit with their ideology without ever bothering to check.

asdf February 11, 2014 at 1:01 pm

1% isn’t “rich”, a lot of those people work for a living.

When we talk about “elite” we mean people with many millions that don’t ever have to work if they don’t want to and can live in luxury regardless. Most of the people I have met like that are liberal.

Ricardo February 10, 2014 at 10:46 pm

Read Andrew Gelman — if you think that rich people are more economically liberal than poor people, you are simply wrong. Rich, privileged people tend to run social causes of all kinds so it’s not surprising that leaders of liberal organizations — and also conservative organizations — would tend to be well off. Nothing new here: the abolitionist movement in the U.S. had lots of rich white people in prominent positions and was mocked for exactly that reason.

Ian February 11, 2014 at 2:03 am

I’ve not read Gelman, but I’ll speak from experience and observation. If you’ve ever had the unfortunate obligation to attend a gala (fundraiser) for one of these ’causes’, you would quickly see through the thinly-veiled facade. It’s nothing more than a matter of keeping up appearances and reinforcing one’s feeling of moral superiority.

In other words, rich, privileged people giving back plays second fiddle to a giant circlejerk of self congratulatory behavior.

So Much For Subtlety February 11, 2014 at 5:09 am

In other words, rich, privileged people giving back plays second fiddle to a giant circlejerk of self congratulatory behavior.

A giant circlejerk of self congratulatory behavior = the modern Left.

No only one-to-one but also on-to.

Ian February 12, 2014 at 12:25 am

Do you really think it’s a surjection? That is, the entire domain of behavior can only map onto the range of modern left? Take off your blinders and see the self-righteous are everywhere and not just in the places confirming your bias.

Jay February 11, 2014 at 11:54 am

What matters is the effect on policy and who is “out for the little guy”, and those “rich” people who actually get into power (rich politicians) tend to be right-wing which is not true. Look at a list of the top 10 wealthiest congressmen and 8 of the 10 are Democrats.

Tim February 10, 2014 at 4:23 pm

What’s the difference between a lottery winner and anyone else in the top 5%? I suppose a lottery winner knows with absolute certainty that they cannot get this money again if they deplete it, someone else in the 5% might be deluded that it’s labor that got them there.

Have economists ever actually studied the maximum value of labor? I.e. if I work all the hours possible to work how much can I make? Because even if I’m the best McDonalds worker ever, work all possible hours, and never sleep, I’m not making it into the 1%.

Ad Nauseum February 10, 2014 at 4:39 pm

By “Mcdonalds worker” are you including management?

Z February 10, 2014 at 4:40 pm

In the US, most lottery winners end up broke within seven years. There was a very detailed Vanderbilt study tracking winners and 70% of people winning a prize a million or bigger ended up broke. I no longer recall the details beyond that and the 70% figure is from memory. This should not come as a surprise to anyone. Playing the lottery is a foolish use of money. People who are good with money tend not to be foolish with it. The poor are the big lottery players and people are poor usually due to poor impulse control.

Joe February 11, 2014 at 6:06 am

another imaginary “fact” pulled straight out of your ass.

TMC February 11, 2014 at 12:12 pm

Every heard of google, or is that imaginary too?

TMC February 11, 2014 at 12:12 pm

Ever heard of google, or is that imaginary too?

Ricardo February 11, 2014 at 1:48 pm

Tim, if you are the best McDonald’s worker ever, I guarantee you will make it into the 1%. (Just not while working at McDonald’s.)

Peter Sperry February 10, 2014 at 4:23 pm

The largest prize going to any of the winners in their sample was 185,000 Pounds, about $277,000. Enough to pay off a small to mid sized mortgage but not exactly enough to support a comfortable retirement. (A 5% draw would only yield $13,850 per year and exhaust the principal fairly quickly.)

So are they seriously maintaining that a one time, unlikely to be repeated, windfall of less than a life changing amount is enough to shift voting patterns for any meaningful length of time?

I am not sure where their methodology went wrong but I suspect some eager grad student could look into it. Because their results do not pass the laugh test.

Frank February 10, 2014 at 4:38 pm

Moreover, there’s no tax on lottery winnings in the UK:

http://www.theguardian.com/money/2012/sep/10/do-you-pay-tax-lottery-win

This makes it particularly implausible that winning should change one’s views on taxation for selfish reasons.

Tom T. February 11, 2014 at 12:11 am

Is there also no tax on the income from one’s winnings?

JWatts February 10, 2014 at 6:58 pm

“(A 5% draw would only yield $13,850 per year and exhaust the principal fairly quickly.) ”

A 5% draw won’t ever exhaust the winnings. Furthermore if you invested it all in an ETF, the amount should grow every year, though probably slower than inflation.

mulp February 10, 2014 at 7:56 pm

Yep, Madoff delivered 10% per year no matter what the market or economy did….

Peter Sperry February 10, 2014 at 9:10 pm

Your investments may be doing that well, most are not. Retirement advisors have recently started recommending a 3% draw, down from 4% and that is for people expecting to kick off in 30 to 40 years. But even allowing for a perpetual 8% draw would only yield an income of $22,160. Not nearly enough to quit work.

Alistair February 11, 2014 at 1:02 am

The average UK mortgage (residual ca[ital ) is about $90k, average house price, about $270k.

TallDave February 11, 2014 at 4:50 am

Except they would immediately invest it and become part of the hated capitalist class.

Preston Sturgeon February 10, 2014 at 4:24 pm

No victor believes in luck.

JWatts February 10, 2014 at 6:59 pm

“No victor believes in luck.”

It seems more likely that everyone believes in taxes.

T. Shaw February 10, 2014 at 4:27 pm

One thing is certain (death and taxes), the federal government “gets rich” on large lottery pay-outs.

If one of us Slobovians (major miracle) wins the next Power Ball jackpot – est. $242,000,000, nominal and opts for a pre-tax lump sum of say $120,000,000, the IRS will realize approximately $34,000,000 from that unit of we the people.

I could not possibly become more rght-wing. I would emigrate to a country whose economy and democracy are functioning.

Tim February 10, 2014 at 4:35 pm

How could you possibly live on that? Only $1.2 million per year for 70 years? Only $100,000 per month for 70 years? Should any man be limited to only being able to buy 2 corvettes every single month for the rest of his life? That’s unreasonable! I can see the appeal of the Tea Party.

msgkings February 10, 2014 at 4:41 pm

T. Shaw:

That begs the question, of course: which country would you have in mind to emigrate to?
Not being snarky, I’ve always been curious which countries appeal to those who have major problems with the US. To me it feels like for all her faults, the US is still one of the better ones.

Doug February 10, 2014 at 5:44 pm

Not that I’m itching to immigrate, but as someone who would consider it and assuming I had F-U money: Monaco, Liechtenstein, Campione d’Italia, Singapore, Switzerland, Hong Kong, Bermuda, Caymans, UAE. Probably in that order of preference taking all factors (taxation, culture, weather, people, etc.). Absent missing my family and friends all would be quite comparable or superior to the US with a large amount of wealth.

msgkings February 10, 2014 at 6:24 pm

I can see where those places would appeal to the megamillionaire set, but your answer reinforces my belief that the US is the ‘best’ large/major/’real’ country in the world. Those you listed range from small to tiny.

T. Shaw February 11, 2014 at 10:30 am

Doug has given it a lot more thought than I have. Given his list, i’d rank Switzerland, Norway and Canada as leading choices.

msgkings February 11, 2014 at 12:09 pm

All hotbeds of socialized medicine and the metric system. Also pretty cold.

Brandon February 11, 2014 at 3:47 pm

Norway and Canada are less economically conservative than the US?

Kelly February 10, 2014 at 4:43 pm

I think it could be the taxes on the winnings that make people shift to the right. A lot of people (at least in the US) don’t ever write a check to the government because of withholding and I imagine the experience of writing a check to the tax man for hundreds of thousands of dollars would be rather traumatic for a lot of people, despite the fact that they are a net winner. My super speculative opinion is that it could be that experience itself that causes the political shift. It’s sort of an endowment effect thing, where they’d be happier if they had won $650k instead of winning $1m and paying $350k in taxes.

TallDave February 11, 2014 at 4:56 am

Texas welcomes you!

Seriously, though, give it a few decades and it might happen. Today Scotland…

Brian February 10, 2014 at 4:35 pm

The effect might entirely be explained by information alone. I wonder how many people understand just how onerous progressive tax rates can be (add in self-employment penalties, state, federal, loss of deductions). I bet most folks have no idea. And when they find out, they change their tune regardless of self interest. I bet a serious education about how taxes work would have similar rightward effects,

Tim February 10, 2014 at 4:53 pm

I tend to think it would backfire. If you explained how much money people had *left over* after taxes they would tend to seem like the biggest whiners in the history of the universe.

JWatts February 10, 2014 at 7:03 pm

I’d love to see everyone currently paying FICA to get a 7.5% raise and a simultaneous removal of the employer portion of the tax. The net effect would be no additional taxes, however it would allow employees to get a better idea of the taxes they pay.

mulp February 10, 2014 at 8:21 pm

But first, they should be required to provide housing and food for their elderly grandparents or parents in their own home, like they do in nations without SS.

dearieme February 10, 2014 at 4:35 pm

Read all about it! Robbing Peter to pay Paul looks less attractive to Peter than it did to Paul.

ohwilleke February 10, 2014 at 5:47 pm

With recruitment tools like this, the GOP will have its declining demographic issues fixed in no time.

Alan February 10, 2014 at 6:18 pm

CONSERVative

Maybe?

The Sanity Inspector February 10, 2014 at 6:35 pm

Don’t a big percentage of lottery winners go bust in a few years? What does that do to their political outlook?

Ray Lopez explains the study February 10, 2014 at 6:53 pm

This is OLD news. As I wrote to TK by email, for a future column suggestion, it is well known (and fiercely contested by Milt Friedman against the Keynesians) that the rich save more than the poor–this is btw one of the tenets behind Keynesian redistribution (aggregate demand is increased more by giving the money to the poor). This study is a logical consequence of that thesis: as you get rich (through a windfall or otherwise, it turns out not to matter whether all at once or over time), you will save more, and thus acquire the characteristics of the 1% (like me, sorry I could not help that bragging).

msgkings February 10, 2014 at 8:14 pm

I think you’ve officially become the douchiest poster here, congrats!

Better luck in the future, prior_approval.

Ray Lopez laughing at the poor February 11, 2014 at 2:11 am

msgkings, are you an LA Kings hockey fan, or just a fan of cheap Chinese food? Anyway servants enter through the back, go on now.

Christopher Haywood-Thoms February 11, 2014 at 5:52 am

Quite snide for a melange, I’d say.

Marie February 10, 2014 at 7:09 pm

I can’t tell from reading the story.

Did they actually track changes in the individuals (e.g. he self-identified as left and voted left in the last seven local and four national elections, and now self-identifies as right and just voted right in the last election)?

It almost reads as if they went to winners and asked what their political leanings were, using some kind of tool, and they noticed that the current political slant of the winners post-win was more right the more they won.

From that they concluded that lottery winners swung right, and righter the more they won.

Hate to nitpick, but those aren’t the same things. And if they did the second, isn’t that pretty confirmation-biasy?

Marie February 11, 2014 at 11:43 am

Just got the bandwidth to download the study.

Definitely I may be missing something, but they don’t actually seem to be comparing political views of individuals before and after wins. Maybe I missed it?

They seem to be taking info on political stats in a population as their “before”, then using direct questioning of the winners within that population as their “after”.

I recognize it would be hard to get a good, large sample for a before/after with individuals — you’d have to interview a large enough number of people to be sure that your after-interview gave you a substantial block of winners. Hard.
And they seem to work very hard to take out obvious sources of error from doing the study this way, like checking to make sure people don’t just drop out of general surveys once they win the lottery. But it still seems pretty apple orchard to apples, doesn’t it?

I think the authors’ assumptions are pretty common sense and sync up with what most of us see — peer group is obviously a big deal, and I’ve seen people move in and out of various political perspectives as they move up the income ladder simply because they start hanging out with a new group of people and consider points of view they never considered when it wasn’t personal. But I’m not sure this study really says what it says it says.

mulp February 10, 2014 at 8:43 pm

Before they won, they were liberals who believed in the government giving them money for nothing???

But after they won, they became conservatives convinced they not only earned their winnings through hard work, but deserved the winnings based on merit???

Ian February 11, 2014 at 2:25 am

This was the first thing that came to mind. As they say, where you sit on an issue is where you stand.

Also, I’ve heard of studies (something about a rigged monopoly game) where people in higher positions, by no merit of their own, acquire a greater sense of entitlement and lose empathy for those of lesser social rank

revver February 10, 2014 at 9:39 pm

If a student attends school, day after day for years on end, without seeing any monetary returns and incurring debt along the way, their efforts pass the “merit test” ; but a lotto player doesn’t?

What’s all the commotion over? Can playing the lottery be considered an endeavour totally devoid of merit? What about the persistence involved in coming back to play week after week, not seeing the fruits of ones labour until the big payoff day?

bandrami February 10, 2014 at 10:09 pm

It’s been a while since I studied UK politics, but 20 years ago “left” and “right” meant something rather different in the UK than in the US.

Can someone recite or point to a “UK Political Spectrum for Simpletons” spiel?

JoeDog February 10, 2014 at 10:45 pm

I have solid left wing credentials. I say we test this theory by giving me a winning lottery ticket….

msgkings February 10, 2014 at 10:59 pm

Thread winner, we’re done here. LOL.

8 February 11, 2014 at 4:24 am

Maybe the small size of the prize made them realize what it takes to actually be rich, assuming the finding doesn’t disappear upon closer research.

See how college athletes stand politically before and after their 1st round pick in the NBA/NFL draft.

TallDave February 11, 2014 at 4:35 am

BREAKING NEWS: People respond to incentives.

The Other Jim February 11, 2014 at 9:10 am

People start thinking differently about taxes once they actually have to, you know… pay them.

Blunt Instrument February 11, 2014 at 9:13 am

Dog bites man.

The essence of conservatism is protection of private property rights. Those with little property have little need for conservatism; those with abundant property have a correspondingly greater need.

Egalitarianism is only directly beneficial to those who have less than the mean.

Mondfledermaus February 11, 2014 at 12:10 pm

Well once you have something to conserve, you become more conservative, what’s surprising about that?

Floccina February 13, 2014 at 3:24 pm

1. I think some people are shocked that the million that they just won is a lot less than a million after taxes.
2. On the other hand, the most anti-welfare people I have known have been the low wage workers they seem to also seem pro-Democrat though because they see the Republicans as the rich white man’s party.

I notice in myself a much less concern about welfare now that I am in the top 20% of earners than I was when I was in the bottom 20%. My feelings back then were like, “Hey we are working hard for low pay so should the welfare recipients”.

Floccina February 13, 2014 at 3:32 pm

How about NBA and NFL signees?

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