Wealth, Health, and Child Development: Evidence from Administrative Data on Swedish Lottery Players *

TLDR

The study estimates the causal effect of large lottery‑derived wealth shocks on the health of winners and their children. It analyzes a large, attrition‑free sample of Swedish lottery winners whose prizes were randomly assigned, allowing control for confounding factors. The analysis finds no meaningful effect of wealth on adult mortality or health‑care use, a slight decrease in mental‑health drug consumption, modest increases in child health‑care use and possible reductions in obesity, with other child outcomes essentially unchanged, indicating that wealth shocks do not explain wealth‑mortality or child‑development gradients in affluent societies.

Abstract

Abstract We use administrative data on Swedish lottery players to estimate the causal impact of substantial wealth shocks on players’ own health and their children’s health and developmental outcomes. Our estimation sample is large, virtually free of attrition, and allows us to control for the factors conditional on which the prizes were randomly assigned. In adults, we find no evidence that wealth impacts mortality or health care utilization, with the possible exception of a small reduction in the consumption of mental health drugs. Our estimates allow us to rule out effects on 10-year mortality one sixth as large as the cross-sectional wealth-mortality gradient. In our intergenerational analyses, we find that wealth increases children’s health care utilization in the years following the lottery and may also reduce obesity risk. The effects on most other child outcomes, including drug consumption, scholastic performance, and skills, can usually be bounded to a tight interval around zero. Overall, 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.