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It’s tough out there for younger generations, who typically hit major life milestones like marriage and owning a home later than their parents and grandparents, largely driven by limited financial resources.
One solution? Simply win the lottery, according to a working paper from the National Bureau of Economic Research.
It likely won’t come as a surprise that suddenly coming into money would affect the trajectory of one’s life. Financial instability is holding back younger generations, but experiencing “an exogenous shock,” like winning the lottery, can help overcome financial restraints like a down payment.
The researchers analyzed federal tax records and state lottery wins of more than 888,000 people worth at least $1,000 between 2000 and 2019, as well as mortgage statements and Social Security records, to get a sense of how financial resources affect those major life milestones like marriage, having children, and homeownership for younger adults aged 25 to 44.
They find that there is a “substantial” positive effect on marriage for single lottery winners, and winners are also more likely to find high-earning partners. This is especially true for winners who didn’t have much in the way of financial assets before their win, consistent, the researchers say, with “sociocultural norms over a perceived need to have money before getting married.”
While it’s possible some of the effect could apply to singles who were likely to get married regardless in the next few years, the researchers note most of the new marriages are between individuals who were not living together before.
One year after winning the lottery, about one in 10 single winners of large jackpots get married, “an increase equivalent to approximately three years of naturally occurring new marriages.” There isn’t much of a difference between men and women’s likelihood to get married.
“The effects are larger and more persistent among younger winners [those aged 25 to 34 years old], suggestive of a critical age range during which one’s financial position is material to forming lasting partnerships,” the researchers write.
The level of financial resources a person has is “material to their marital status,” the report notes.
“Financial resources are more important for younger and financially insecure couples in forming legal unions,” the researchers write. And “the relationships they form are of higher quality and less likely to result in divorce.”
That said, winning the lottery doesn’t guarantee you’ll stay married: The researchers also find married winners are no likelier to stay married, and in fact may be more likely to get divorced. This is especially true in states where a lottery win (and other assets) do not need to be split 50-50 upon divorce.
Lottery winners build wealth in different ways
Those who win the lottery—especially those who win more substantial sums—are able to buy homes, and hold onto those homes long-term, building additional wealth. Most people know that homes are the biggest asset many Americans will ever own; the research helps show how “differential access to
mortgages likely exacerbates inequality” as well.
“The large share of winners that buy houses outright when they can afford to do so reveals the high value Americans continue to place on homeownership and the important role of housing equity in retaining wealth,” the researchers write.
Interestingly, the researchers found that having children is even too costly for lottery winners. There is little effect on child-bearing five years after coming into the money, except for a small, marginally significant effect on births for those who win at least $1 million—an amount of money that is “an order
of magnitude greater than the estimated cost of raising a child.”
That said, the researchers note that changes in marital status, child-bearing, and homeownership occur in tandem with a financial change like winning the lottery.
“Financial resources affect multiple aspects of household formation concurrently, highlighting the
joint nature of household formation decisions,” the researchers write.
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