July 23, 2004

What happens to people of no previous great wealth when they suddenly hit a big lottery jackpot? According to the July 10 Boston Globe, "sudden wealth syndrome" is often the result, leading to "impulse spending and social isolation". Dr. Steven J. Danish, professor of psychology at Virginia Commonwealth University in Richmond, "has counseled lottery winners for more than 12 years, and almost all his patients have had serious problems after collecting their winnings" -- though of course the ones who reach his counseling desk are unlikely to be a random sample of all winners.

Jim Leitzel, who happens to be guest blogging this week at Overlawyered, a few weeks ago tried to track down at his Vice Squad blog a rumor that one-third of lottery winners end up bankrupt; it doesn't seem to be very well authenticated. A Google Answers thread pulls together many other bits of information on how extensive the problem may be.

Researchers interested in sudden wealth syndrome "have also looked at dot-com multimillionaires whose financial lives changed dramatically during the boom years of high technology", reports the Boston Globe piece, but Dr. Stephen Goldbart, codirector of the Money, Meaning, and Choices Institute, "said that lottery winners are particularly prone to impulse buying because they have no previous ties to the money they have won, as opposed to those who gain large sums though salaries". The application of all this information to the American system of civil litigation damages is left for the reader to work out as an exercise.