Oct 162016
 

We’ve undoubtedly all heard stories of someone who’s getting by financially, then they win the lottery, go absolutely bugnuts on buying way more stuff than their winning can justify, and end up in worse shape than before they won. But this article details another type of person who goes broke due to the lottery: the neighbors of the winners.

Why You May Go Bankrupt if Your Neighbor Wins the Lottery

Before I started reading the article, I figured it would detail the sad possibility of your neighbor winnign the lottery, doing a whole lot of improvements to their property and perhaps buying & improving others in the area, consequently drivign up property values and thus tax rates, screwing over the poor schmoes who weren’t involved but who can now no longer afford their homes. But it’s worse than that.

In the case I’d assumed, the poor schmoe is blameless. Just sheer dumb luck to suddenly get gentrified out of house and home. But what the article actually describes is blame that can be laid entirely at the feet of the neighbors.

In short, the cause is envy. Your neighbor wins the lottery and, for some reason, *doesn’t* promptly move away. But they *do* go out and buy a brand new sports car, or SUV, or in-ground swimming pool, or life-size Hulkbuster. And what do *you* do? If you are a rational, wise and self-aware person, you go next door, congratulate them, then go about your life as if nothing has changed… because for you, it hasn’t. But if you are like a more common human being, you see your neighbors neato new stuff, and you decide, ” Hmmm. I should one-up them.”

Which is fine, and helps keep the economy motoring along, but if you *can’t* afford to one-up your neighbors, you’re rather stupidly setting yourself up for financial disaster.

The abstract for the Federal Reserve Bank of Philadelphia working paper that the article is based on has this to say:

We provide new causal evidence that keeping up with the Joneses behavior causes financial distress by examining whether lottery prizes of random dollar magnitudes increase bankruptcy filings of very close neighbors of the winner. We find that a 1% increase in the lottery prize causes a 0.04% rise in subsequent bankruptcies among the winners’ close neighbors. We also provide evidence on conspicuous consumption as a mechanism for this causal relationship. The size of lottery prizes increases the value of visible assets (e.g., houses, cars) but not invisible assets (e.g., cash, financial assets), appearing on the bankruptcy balance sheets of neighboring bankruptcy filers.

So, if your neighbor wins the lottery and as a result you promptly spend yourself into the poorhouse, whose fault is it? It’s not your neighbors; they didn’t force you to spend a dime. It’s not the Lottery’s fault. It’s not the government’s fault, the taxpayers, your other neighbors. It’s not even the fault of the people who sold you stuff (assuming, of course, that they didn’t sell you stuff under false pretenses). It’s *your* fault.

What’s interesting, I think, is that I’d bet that most people would agree. When presented with this as a pure hypothetical about a neighbor buying beyond his means as a result of someone else winning the lottery, they’d agree that it’s the neighbors fault and responsibility. But here’s the thing: change the words a little bit, and instead of the neighbor winning the lottery, it’s the neighbor running a successful business and making a mintload of money. Suddenly we’re talking about “income inequality,” and somehow the neighbor is no longer responsible. Even if the rich guy isn’t at fault exactly for the neighbors plight, many people will still believe it is the role of the government to swoop in and take some of the rich guys money to redistribute it to the neighbor.

The way your neighbor chooses to spend his bags of cash (assuming we’re not talking about buying nightly rock concepts in the back yard or fireworks displays or whatever) has no material effect on you. Heck, let’s say with his new millions he is able to lease time on a time-travelling 100-inch OLED 16K 3D TV and is able to watch in the privacy of his home theater Episodes 8 through 127 of Star Wars, peer into alternate realities and catch up on seasons 2 through 12 of Firefly, and binge-watch “Keeping up with the Scarlett Johansson & Kate Upton Zero-G Naked Fun Time Hour.” Assuming he doesn’t actually spoil those future episodes of Star Wars… how are you harmed by his ability to enjoy things that you cannot? Jealous? You bet. But you not only have no right to what he has, you’re a dumbass if you do self-destructive things you cannot afford, like mortgaging your house to catch a glimpse of the magical TV, or voting for socialist nightmares like Bernie Sanders who promises to take your neighbors stuff because it’s somehow “unfair” that he has what you don’t.

Do what I do when you see someone with something you want but cannot have: grumble, piss and moan, then get on with life. If “getting on with it” means working harder to make more money to earn that which you want, so much the better. Obviously some things that you might want can’t be bought no matter the fatness of your bank account, but destroying yourself over it is just stupid.

 Posted by at 3:49 pm
  • sferrin

    What kills me is then Bernie goes on to buy his $600,000 lake house (in addition to his other houses -plural–) and his followers give him a pass. As long as he promised to take from the haves and give to the have-nots that’s all that mattered. IMO the parasites wanting to feast on the works of others should be stripped penniless and tossed in the streets. “Now what’s the lesson here shit head?”

    • Thucydides_of_Athens

      Some people think his actual role was to engage college aged students and keep them on the Democrat plantation so they wouldn’t get uppity and , you know, vote for a candidate who might actually represent their interests (be it Garry Johnson, Jill Stein or Donald Trump).

      A $600,000 house? He sold out too early, and could have held out for a lot more.

  • Herp McDerp

    Is old Russian story …

    Two angels are traveling incognito on Earth. They are walking down a country lane when one turns to the other and says, “I don’t think I’ll ever understand humans. I not only don’t understand how they can want to sin, I don’t even understand what some of their sins are. For instance, what’s the difference between ‘greed’ and ‘envy’?”

    The other angel replies, “Here, I’ll show you.” They reach a small farm, and the second angel looks into the heart of the farmer. “Here’s greed,” he says.

    “Hello, Mister Farmer!” the angel says. “That’s a mighty fine cow you have there. But did you know your neighbor down the road has two cows? How does that make you feel?”

    “Two cows?” says the farmer. “Well then, I want three cows! No, four cows!”

    The two angels continue on until they come to another farm. Again, the second angel looks into the heart of the farmer. “Here’s envy,” he says.

    “Hello,
    Mister Farmer!” the angel says. “That’s a mighty fine cow you have there. But did you know
    your neighbor down the road has two cows? How does
    that make you feel?”

    “Two cows?” says the farmer. “Well then, I want his cows todie!”

  • doug Pirahna

    “…and binge-watch “Keeping up with the Scarlett Johansson & Kate Upton Zero-G Naked Fun Time Hour.”

    If this becomes a Kickstarter, I’m in!