MegaMillions - Mo' Money Mo' Problems?

By Andrea Karim on 7 March 2007 (Updated 10 June 2007) 5 comments

Last night's MegaMillions drawing was for $370 million dollars. They say that money doesn't buy happiness, but I've got enough happiness right now. So I could totally use $370 million for, say, shoes.

Did I say 'shoes'? I meant 'for smart investing'. In shoes.

I know, I know. It's not what you earn, it's what you save. But earning a little more can't hurt, can it? Now, I don't buy lottery tickets. My sister does occasionally, but our parents view the entire process with a certain amount of distrust, so I've never gotten into it. Also, I've always viewed lotteries as a tax that feeds unfairly upon people who are struggling financially. This may be annecdotal, but I've never seen anyone who appears to be well-off buying a lottery ticket.

However, something about the recent MegaMillions drawing made me wonder if perhaps I'm being too harsh on the lottery system. After all, who doesn't want a chance at a piece of $370 million dollars?

And come to think of it, can't being insanely rich take away problems that plague so many of us, thus reducing stress and contributing to happiness? According to Money Magazine, more money can make a difference, especially in reducing stress, but only up to a certain point.

Money magazine columnist Jean Chatsky polled 1,500 people for her book You Don't Have to Be Rich and found that more money makes people significantly happier only if their family income's below $30,000, but by $50,000, money makes no difference.

But isn't the winning alone enough to totally revamp your mental outlook? Researchers at Emory University studied how the brain reacts to receiving money randomly and receiving money in exchange for work performed on a computer, and found that satisfaction is higher when money is received for work.

In the Emory study, published Thursday in the journal Neuron, volunteers played a computer game in which they had to push a button every time a triangle appeared. The 16 volunteers played while their brains were scanned by a magnetic resonance imaging machine, or MRI. The researchers found that some reward centers of the brain were activated whenever a volunteer received money. However, the striatum was activated only when volunteers worked for their reward.

Sure, I can understand that, but the researchers weren't randomly giving the subject millions of dollars. Surely people must be happier when they receive millions of dollars?

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[O]ther studies have shown “there’s substantial evidence that people who win the lottery are not happier a year after they win the lottery. It’s also fairly clear from the psychological literature that people get a great deal of satisfaction out of the work they do.”

The BBC reported mixed feeling on the matter, pointing out that among lottery winners in the UK, those that are dissatisfied with their lives prior to winning are rarely helped by the earnings in any substantial way. But then again, most people who win are buoyed in some small psychological way, even if the winnings are only a few thousand pounds.

"Lots of people would like to think that there are a lot of miserable millionaires out there, but even quite small windfalls show up in our statistics on psychological wellbeing. Large sums are better than small sums."

It's worth noting that in the UK, anyone who wins more than 550,000 pounds gets automatic access to investment advisors.

Brad Duke won the Powerball jackpot in 2005 and has since parlayed his winnings into investments that have made him even richer. Duke has invested in new businesses and earned a good chunk of change in the process. Duke seems to be an example of someone who was pretty happy with his life beforehand, and he certainly isn't turning me off of the idea of the lottery with his attitude. Ask if he is happier since his win, Duke replied:

Absolutely. When it comes down to it, I get to do the things professionally that I've always wanted to do. I get to invent a piece of equipment that I've always been thinking about doing. I get to give back to some people that have given to me over years.

Ah, so the road to financial happiness is paved with investment wisdom and hard work. I'm hoping the MegaMillions winners are able to use the windfall to increase their happiness rather than exacerbate any current miseries.

How about you guys? Do you buy lottery tickets? Just for fun?

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Guest's picture
Joel

As a habit I steer clear of the Lotto. But throwing my hat in the ring for $370,000...If I make it by a gas station before tonight I will.
-J

Guest's picture

Yes, I buy lottery tickets. My wife and I can be considered well-off, and I am positive I don't have a gambling problem. I just have high aspirations of what to do with millions of dollars. Most of it would go to charities, family and friends, but the rest would allow me to volunteer my time when I wanted and how I wanted, rather than trying to fit in a few volunteer efforts when I had the time.

Btw, I spend about $2-$6 per week on tickets. Some weeks, nothing. And I've only been buying for about a year now.

Guest's picture
Andy

I don't buy tickets regularly, but when the jackpot gets up there (not that I couldn't use the prize money when it's "love"), I'll take a chance for a couple dollars. I like your post, it's well-informed. I thought you might be interested to see the post on the Compete.com blog that shows how many more people are checking for the numbers online as the jackpot grows. I guess the publicity of the big money really draws a crowd! Check it out... http://blog.compete.com/2007/03/19/megamillions/

Guest's picture
Guest

i am so addicted to lottery tickets im on welfare and spend every last dime on them.I havent won but when i do it will be a rags to riches story...im feeling an itch im going to go buy some tickets now...sorry have to go buy a forty and some tickets.

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T Guest

After winning a small windfall ($300k after taxes and expenses), things change when you have actually won a sizable amount. There are several key things after having won a big amount. You must create and maintain boundaries with everyone. Dynamics can and will change between you and everyone else. That is why rich people tend to associate with rich people. Also important is to pay off everything so no matter what happens, you are debt free (this assumes you don't go buy alot of stuff on credit and make payments so you feel like you aren't spending as much). Stay debt free too. To quickly finish, one of the hardest aspects of a windfall is how easy it is to spend/lose most or all of it and the intense stress that creates. And if you start to go through a lot of it, you try to quickly get it back somehow causing you to lose more of it and it isn't easy to break that downward spiral. After paying off all debt, you have to set aside an amount in cd's, treasuries, ect. things that won't go down in value an amount that you can live with if you go through all you money. Winning a large amount of money seems like the answer to things, but it creates a new world of stresses that can be overwhelming. And not having a rock-solid plan for the money means you could be one of the many ruined emotionally and economically lottery winners.