Lottery Winners Cause Neighbors To Declare Bankruptcy

August 23, 2017

© Olivier Le Queinec | Dreamstime

Tonight's Powerball lottery jackpot is the second highest in history, with an estimated $700 million in prize money up for grabs. While we all hope lady luck is in our corner, your neighbor may be jinxing you. Neighbors of lottery winners are significantly more likely to declare bankruptcy within a few years of the big event than other people who live in neighborhood without lottery winners.  The study found for every $1,000 increase in lottery winnings raises the risk of bankruptcy among the neighbors by roughly 2.4%. It's a classic case of keeping up with the Jones’s.  As the lottery winner makes drastic home improvements and park flashy cars in their driveway, neighbors feel the need to and is on extended vacations, the neighbors boost their own spending on visible markers of prosperity, even though they haven’t had a sudden run of financial luck. The closer you live to a lottery winner, the more money is spent to keep up regardless of it's a rich, moderate or low income neighborhood. The phenomenon works in reverse when someone declares bankruptcy in the neighborhood. In every month after someone filed for bankruptcy, the neighbors reduced their spending by around 3%. 

SOURCE: Time Money

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