This story is quite common. The obvious conclusion is that a large infusion of money can ruin someone. But it occurred to me recently to wonder if there’s a selection effect where people who are bad with money are far more likely to buy lottery tickets. People who are bad with money can waste whatever quantity they are given. Someone like that isn’t going to get a lot happier with an infusion of cash. Or rather they would with a gradual infusion over time coupled with some training and discipline. 3 things which are deliberately avoided in the framing of the lottery.
The interesting part is that lotteries are investment schemes of a sort and designed for gradual payouts more akin to an annuity. The jackpot numbers always include a disclaimer that that would be the total winnings over the lifetime of the payout of that "investment product": immediate payouts are considerably smaller and not just because they involve more taxes. (Obviously it is in the lotto's favor to often spin it as entirely taxes and fees, rather than admitting that it's an "investment" product that they "sell" to "buyers" where the large dollar figures are based on a time-value-of-money calculation.)
The number of contestants that take the lump sum up front instead of treating it like an annuity to supplement their lifestyle over time is staggering, and also indeed another likely indicator of the selection effect that the people most likely to play the lottery are the least likely to have good investment advice in their lives.
There is a selection effect. It’s actually well documented [0] that poor people buy more lottery tickets than people richer than them. Not just as a percent of income, but also absolute dollars.
From a behavioral perspective, I doubt that most Americans are well suited to winning a lottery and being able to manage that transition well. Just look at all the bankruptcy stats on lottery winners. [1]
I work with people who have a lot of money. It’s part of my job. And although I’m not rich, im not suffering either. But this week as I reflected with my wife on what winning a billion dollars would be like, the thought that it would rip you out of whatever reality we currently live in and plop is into another reality is inescapable. For instance, I want to enjoy the money. That means I’m never flying coach again. But if I’m flying my family around the world first class, who do we go with? Our friends don’t have that kind of money. So would we pay for them? Ok, then when do we stop paying for others? (Before the money is all gone). And how does it affect the friendship when one friend is paying for everything the other one enjoys? The dynamic is weird, and probably stressful as can be imagined.
Having enough money that you can’t run out imof it (assume being prudent) would be great, but the social costs are high. I like my friends and neighbors and don’t want to have to get new ones because of the influx of ridiculous amounts of money.
He was arrested for minor and less minor offenses many times after his winnings
When he offered $10,000 to improve the city's water park so that it was more handicap accessible, locals complained that he spent more money at the strip club.
A lot of people point to this guy because he had money before and was successful.
The hounding sounds awful but he made some poor choices.
-He stayed in the small town.
-He left huge sums in his car (had 500k and 200k stolen in separate occasions).
-Pulled out 50k at a strip club and slammed on the bar
Also, he had the problem of being one of the first. We just had a 1.5 billion earlier this year, another one just happened at 1.6. powerball tonight is at 620 and no one seems to care.
This is the line that always blows my mind when this comes up:
>Whittaker's car was twice broken into, by trusted acquaintances who watched him leave large amounts of cash in it. $500,000 and $200,000 were stolen in two separate instances.
The more I read lottery winning stories, the more it becomes clear that you need to move (pref to another country) and change your name on the social level.
As for the handouts and beggers, it seems like it'd be better to incinerate all of the mail and make several anonymous donations to hospitals and programs (e.g. Make a Wish) in smaller amounts ($50k - $100k.)
It also seems prudent to have a few financial managers who are basically quarantined and unaware of the total sum of your net worth.
While it would be tempting to give money to family and friends, I don't think you can go down this route with friends. I think helping family out by paying off their mortgage is fine, but I believe that most financial exchanges between friends spoils the relationship. This also applies for treating people to fancy dinners and stuff. I think you'd have to suck it up and split cheques like the pre-lotto days.
Anyway, thinking about this is a fun mental exercise, but I don't doubt that I'd wind up with a knife in my spine, found days later on my personal yacht (not the one I entertain on.)
It's interesting to contrast the picture that post paints of Jack Whittaker with how the Washington Post article describes him. The Reddit post makes it sound like he was a good guy and all the bad things that happened to him were unjust, while the WP article paints him as a villain because he changed when he came into great wealth.
The types of people who know how to handle this aren't the types of people who play the lottery.
But yeah, I totally agree with the top subcomment: consult an attorney. Have that attorney help you with everything, like literally everything. In fact, it might be worth getting two so they make sure the other doesn't take advantage of you and so you'll have backup in case one attorney is unavailable. Your attorney should be able to hook you up with a good financial advisor, insurance (you'll want umbrella insurance along with a bunch of other insurance you probably never knew you might need).
Interesting. I wonder how prevalent this sort of thing is? I mean, even small populations of people will contain a ne'er do well, or a gambler or something. Does the prevalence of lottery winners that screw up match the general population's prevalence of individuals who screw up?
Without some indication like the above, it's hard to take the WaPo seriously on this.
About 30 years ago, I read a book about lottery winners and the stories read very similar to Mr. Whitaker's, back when a mere million dollar payout was a big deal.
Though it's possible the book had a selection bias - because who would read the stories that ended happily ever after?
I'm not sure regular schmoes can avoid problems with large sums of money because we're not used to dealing with wealth or the problems it attracts. Rock stars, pro athletes, and even heirs to family fortunes have similar problems.
Given the likelihood of winning, I've already spent too much time thinking about what life modifications might be needed but here goes --
1) If you know or can access someone who has tons of money (e.g. Bill Gates), ask them. Though people such as Bill Gates probably have most of their wealth in investments, not cash.
2) Get a second address or at least access to a place under someone else's name. Assume your driver's license info will become public knowledge.
3) A couple of lawyers on retainer is good, at least one who specializes in defending against frivolous lawsuits. Maybe one who specializes in such lawsuits, just to knock them out of the pool of possible attorneys who would come after you. I heard Michael Avenatti might be available.
4) Having a friend or two in the police might help, they can find people willing to pull security details. The key phrases here are POST-certified, sworn officers. I'm not as big on hiring military-grade "operators" but maybe if you find yourself dealing with kidnappers or other hard-core types...
5) I prefer lump sum, because governments have a reputation for altering plans. Not to say a government wouldn't just confiscate one's holdings, but it's usually easier to not give something than to take it back.
6) If you are a man, seriously consider a vasectomy. That won't stop the paternity suits but you'll sleep a bit easier. Apparently celebs have doppelgangers who bed women on the reputation of others. That may be a harder scam to pull off in the age of smartphones.
In most states, the biggest issue is still the one of anonymity.
I wonder if there’s a way around that by selling/auctioning off your winning ticket to somebody who’s already famous and, say, a billionaire at a discount.
I don't know why there hasn't been a lawsuit about this yet. Maybe there will be at the Federal level. Since some states allow anonymity and as such the powerball agreements do then it seems unreasonable for states to require public disclosure.
Perhaps simply selling your (unsigned) winning ticket to _anyone_ for payment after they collect would work. After all, they're going to be a centimillionaire as soon as they cash the ticket in. If I lived in a non-anonymous state I would seriously consider taking, say, $100m and letting someone else have the balance of the jackpot in exchange for them taking all the publicity.
Would be rather tough to find a trustworthy buyer, would need strong contracts, and some means of enforcing collection since if you need to go to court you're not anonymous anymore and there's no possibility of using escrow.
Not in principle impossible since a lottery ticket is a bearer instrument.
Interestingly, anonymity is the default in France.
One is actually encouraged by the lottery to stay anonymous and they are immediately presented private bankers to help handle the money.
And people will still go public, I think this is because of the fame which they do not realize to be extremely short lived for the general population but becomes a nightmare with friends, family and other people your barely know.
Of course, what's true of individuals, is true of societies, too. Getting rich quick (particularly without effort) brings out the worst. Look a Saudi funding for 911 and much other mischief they've funded, for example.
But this may be true of Western nations in general as wealth accelerates; and the increasing Gini coefficient in the U.S. may be just one more sad symptom of too much wealth, not too little. The U.S. won the techprogress lottery, and doing so seems only to have amped up political craziness, drug use and inequality.
[+] [-] true_tuna|7 years ago|reply
[+] [-] WorldMaker|7 years ago|reply
The number of contestants that take the lump sum up front instead of treating it like an annuity to supplement their lifestyle over time is staggering, and also indeed another likely indicator of the selection effect that the people most likely to play the lottery are the least likely to have good investment advice in their lives.
[+] [-] MR4D|7 years ago|reply
From a behavioral perspective, I doubt that most Americans are well suited to winning a lottery and being able to manage that transition well. Just look at all the bankruptcy stats on lottery winners. [1]
I work with people who have a lot of money. It’s part of my job. And although I’m not rich, im not suffering either. But this week as I reflected with my wife on what winning a billion dollars would be like, the thought that it would rip you out of whatever reality we currently live in and plop is into another reality is inescapable. For instance, I want to enjoy the money. That means I’m never flying coach again. But if I’m flying my family around the world first class, who do we go with? Our friends don’t have that kind of money. So would we pay for them? Ok, then when do we stop paying for others? (Before the money is all gone). And how does it affect the friendship when one friend is paying for everything the other one enjoys? The dynamic is weird, and probably stressful as can be imagined.
Having enough money that you can’t run out imof it (assume being prudent) would be great, but the social costs are high. I like my friends and neighbors and don’t want to have to get new ones because of the influx of ridiculous amounts of money.
[0] - https://www.bloomberg.com/news/articles/2018-09-12/the-poore...
[1] - https://www.cnbc.com/amp/2017/08/25/heres-why-lottery-winner...
[+] [-] explorigin|7 years ago|reply
[+] [-] justaguyhere|7 years ago|reply
When he offered $10,000 to improve the city's water park so that it was more handicap accessible, locals complained that he spent more money at the strip club.
Poor guy. Humans can be real nasty :(
[+] [-] sharkmerry|7 years ago|reply
The hounding sounds awful but he made some poor choices.
-He stayed in the small town. -He left huge sums in his car (had 500k and 200k stolen in separate occasions). -Pulled out 50k at a strip club and slammed on the bar
Also, he had the problem of being one of the first. We just had a 1.5 billion earlier this year, another one just happened at 1.6. powerball tonight is at 620 and no one seems to care.
[+] [-] stevewillows|7 years ago|reply
>Whittaker's car was twice broken into, by trusted acquaintances who watched him leave large amounts of cash in it. $500,000 and $200,000 were stolen in two separate instances.
The more I read lottery winning stories, the more it becomes clear that you need to move (pref to another country) and change your name on the social level.
As for the handouts and beggers, it seems like it'd be better to incinerate all of the mail and make several anonymous donations to hospitals and programs (e.g. Make a Wish) in smaller amounts ($50k - $100k.)
It also seems prudent to have a few financial managers who are basically quarantined and unaware of the total sum of your net worth.
While it would be tempting to give money to family and friends, I don't think you can go down this route with friends. I think helping family out by paying off their mortgage is fine, but I believe that most financial exchanges between friends spoils the relationship. This also applies for treating people to fancy dinners and stuff. I think you'd have to suck it up and split cheques like the pre-lotto days.
Anyway, thinking about this is a fun mental exercise, but I don't doubt that I'd wind up with a knife in my spine, found days later on my personal yacht (not the one I entertain on.)
[+] [-] 07d046|7 years ago|reply
[+] [-] beatgammit|7 years ago|reply
But yeah, I totally agree with the top subcomment: consult an attorney. Have that attorney help you with everything, like literally everything. In fact, it might be worth getting two so they make sure the other doesn't take advantage of you and so you'll have backup in case one attorney is unavailable. Your attorney should be able to hook you up with a good financial advisor, insurance (you'll want umbrella insurance along with a bunch of other insurance you probably never knew you might need).
[+] [-] tryonqc|7 years ago|reply
[+] [-] globe1337|7 years ago|reply
[+] [-] bediger4000|7 years ago|reply
Without some indication like the above, it's hard to take the WaPo seriously on this.
[+] [-] jarfil|7 years ago|reply
[+] [-] squozzer|7 years ago|reply
Though it's possible the book had a selection bias - because who would read the stories that ended happily ever after?
I'm not sure regular schmoes can avoid problems with large sums of money because we're not used to dealing with wealth or the problems it attracts. Rock stars, pro athletes, and even heirs to family fortunes have similar problems.
Given the likelihood of winning, I've already spent too much time thinking about what life modifications might be needed but here goes --
1) If you know or can access someone who has tons of money (e.g. Bill Gates), ask them. Though people such as Bill Gates probably have most of their wealth in investments, not cash.
2) Get a second address or at least access to a place under someone else's name. Assume your driver's license info will become public knowledge.
3) A couple of lawyers on retainer is good, at least one who specializes in defending against frivolous lawsuits. Maybe one who specializes in such lawsuits, just to knock them out of the pool of possible attorneys who would come after you. I heard Michael Avenatti might be available.
4) Having a friend or two in the police might help, they can find people willing to pull security details. The key phrases here are POST-certified, sworn officers. I'm not as big on hiring military-grade "operators" but maybe if you find yourself dealing with kidnappers or other hard-core types...
5) I prefer lump sum, because governments have a reputation for altering plans. Not to say a government wouldn't just confiscate one's holdings, but it's usually easier to not give something than to take it back.
6) If you are a man, seriously consider a vasectomy. That won't stop the paternity suits but you'll sleep a bit easier. Apparently celebs have doppelgangers who bed women on the reputation of others. That may be a harder scam to pull off in the age of smartphones.
[+] [-] TomVDB|7 years ago|reply
I wonder if there’s a way around that by selling/auctioning off your winning ticket to somebody who’s already famous and, say, a billionaire at a discount.
[+] [-] sjg007|7 years ago|reply
[+] [-] ThrowawayR2|7 years ago|reply
[+] [-] scrumper|7 years ago|reply
Would be rather tough to find a trustworthy buyer, would need strong contracts, and some means of enforcing collection since if you need to go to court you're not anonymous anymore and there's no possibility of using escrow.
Not in principle impossible since a lottery ticket is a bearer instrument.
[+] [-] BrandoElFollito|7 years ago|reply
[+] [-] neonIcon|7 years ago|reply
[+] [-] Nomentatus|7 years ago|reply
But this may be true of Western nations in general as wealth accelerates; and the increasing Gini coefficient in the U.S. may be just one more sad symptom of too much wealth, not too little. The U.S. won the techprogress lottery, and doing so seems only to have amped up political craziness, drug use and inequality.