From: Mike Lorrey (mlorrey@datamann.com)
Date: Mon Jul 23 2001 - 09:02:04 MDT
Lee Corbin wrote:
>
> Chris Rasch dug up the answer!
>
> > Here's the section relevant to lotteries:
> >
> > "...The Imbens research reinforces an earlier study by H. Roy Kaplan, a
> > sociologist now with the National Conference for Community & Justice in Tampa,
> > Fla. In a 1985 paper in the Journal of the Institute of Socioeconomic Studies,
> > Kaplan found that one-fourth of the big winners and their spouses stopped working
> > within a year of their winning...."
>
> May we assume that right off in the United States, about one
> fourth of the people would stop working within a year? Are
> the buyers of lottery tickets typical? I'm guessing that
> they are.
>
> It frankly surprises me that the answer is as low as one-fourth.
> Perhaps after a few years, the proportion becomes greater. On
> the other hand, some of those people will go start new businesses;
> still the number that would is probably negligible.
THese conclusions also discount the fact that managing a multi-million
dollar fortune can become a full time job if the individual owner wishes
to take charge of their own money.
All of this is actually quite meaningless to the original point of
debate. Do people who inherit large fortunes or win them by lottery or
court judgement wind up producing a greater benefit to society? The
studies cited seem to put a value judgement on activity, asserting or
implying that one is only being a benefit to society when one is
exerting physical labor.
Wealth is a big responsibility, and properly managing it can create a
greater good to society in the end very easily. For example, simply
looking at it from a tax perspective, lets say I'm a carpenter making
$35,000 a year when I win a $2 million lottery (after taxes are paid on
the prize). Making $35k, I am paying some $5-7k in income taxes. If I
simply stick my $2 mil in, say, bonds or rather secure mutual funds
which may yield between 7-18% annually, which results in $140k-360k
annually in capital gains income, which I'd pay something like $50k-120k
in taxes. All told, I'd be generating $55-127k in taxes for the
government.
If instead I quit my carpentry job and studied up on investing, I could
increase my annual return to between 20-40% annually, generating twice
as much money in taxes, and thus benefitting society twice as much by
'not working' as by 'working'.
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