Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1060: Wealth, Health, and Child Development: Evidence from Administrative Data on Swedish Lottery Players

David Cesarini (), Erik Lindqvist (), Robert Östling () and Björn Wallace ()
Additional contact information
David Cesarini: New York University, Postal: and Research Institute of Industrial Economics (IFN),Stockholm, Sweden
Erik Lindqvist: Stockholm School of Economics, Postal: and Research Institute of Industrial Economics (IFN),Stockholm, Sweden
Robert Östling: Institute for International Economic Studies, Postal: Stockholm University, Stockholm, Sweden
Björn Wallace: University of Cambridge, Postal: Cambridge, United Kingdom

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, which include 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.

Keywords: Health; Mortality; Healthcare; Child health; Child development; Human capital; Wealth; Income; Lotteries

JEL-codes: I10; I14; J24

43 pages, First version: March 12, 2015. Revised: October 9, 2015.

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online_appendix_IFN_WP1060.pdf PDF-file Online Appendix
wp1060.pdf PDF-file 

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