June 2021

IZA DP No. 14489: Does Money Strengthen Our Social Ties? Longitudinal Evidence of Lottery Winners

We study the effect of lottery wins on social ties and support network in the United Kingdom. On average, we find that winning more in the lottery increases the probability of meeting friends on most days, which is consistent with the complementary effect of income on social ties. The opposite is true with regards to social ties held for more instrumental reasons such as talking to neighbors. Winning more in the lottery also lessens an individual support network consistently with a substitution for instrumental social ties. However, further robustness checks reveal that the average lottery effects are driven by the few outliers of very large wins in the sample, thus suggesting that small to medium-sized wins (<£10k) may not be enough to change people's social ties and support network in a substantial way.