What it’s really like to win the lottery

0:00In November 1994, the UK's National Lottery was launched. It's the show the whole country's been waiting for. Exclusive to BBC One, the first live draw for the National Lottery. The first winners, announced, live on TV, won£800 ,000. And the bonus is number 10. The bonus is great.

0:31Since then, the National Lottery has made 7 ,000 British people millionaires. But what is it really like to win the lottery? And does it make the winners as happy as we might think? To find out, I'm chatting with someone who has worked behind the scenes at the lottery. someone who was tasked with helping hundreds of winners. My name is Matt Pitcher and for 10 years I worked with Camelot advising their large lottery winners. He met many, many happy winners but also some not so happy winners. I'd had the winner's information sheet, it had the details for a married couple. I walked into the room and it was just a man there.

1:11So that's immediately, that's a red flag straight away for any of these meetings. The lottery winners reveal an awful lot about human psychology, about how we respond to success, and about how we should spend our money to achieve happiness. And we'll cover all of that on today's episode of Natural.

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2:14Hello, you're listening to Nudge with me, Phil Agnew. Today, I'm learning what it is really like to win the lottery. And to find out, I'm interviewing someone who has spent a decade advising lottery winners. My name is Matt Pitcher. I'm founder and managing partner at Altor. And for 10 years, I worked with Camelot advising their large lottery winners. So for those who aren't in the UK, Camelot was running the UK lottery. Could you give a bit of history about the UK lottery? Yeah, so the National Lottery here in the UK is something of an institution, actually. It was started up in 1994. The very first ticket was bought by John Major, who was the UK Prime Minister at the time.

2:58I'm sure many listeners will remember that it was a mainstay of Saturday night TV when it first launched. In just 58 minutes from now, the draw for the first national lottery will be made live at BBC Television Centre. It had Noel Edmonds and Theo Turner presenting the show. The draw was live on telly and it's remained actually a huge part of UK national life really for the subsequent 30 and a bit years. Yeah, it's back in 30 years ago when Noel Edmonds was presenting it, you can imagine a lot of people playing it. I guess it's become less visible now. But am I right in thinking it's still played by a huge number of people in the UK?

3:40Yeah, absolutely. So there's about 36 million people that are playing at least once a year. And the majority of those will be playing weekly with the same numbers week in, week out. So it's about two thirds of the UK adult population. and for maybe those international listeners the way it works is all of these people buy a ticket and a proportion of that revenue then gets put into a prize fund and you know on average what does a uk lottery winner win well so on average quite small amounts of money actually because the the most people are winning small amounts however there are bigger prizes so in the uk you can win a million which used to buy you a lot more 32 years ago than it does actually these days in the UK and there's also a euro millions draw and that's really big money so typically that's a that roll up to 100 million plus in sterling when someone's lucky enough to win that top prize what actually happens what happens when someone wins the the big prize so it is quite an extraordinary process actually when you you win big first thing to say is the national lottery operator they employ these people called winners advisors so that wasn't my role but they're directly employed by the by the lottery operator as was camelot until a couple of years ago and and these guys have got an incredible job because the the support they give to the big winners is lifelong so that's the promise from the lotteries they'll they'll look after you they'll be on the end of a phone when you're having a bit of a crisis or your children have stopped talking to you because you haven't given them enough money, you can phone these people and they'll stick with you through thick and thin.

5:20And that person for the big win will typically come to the home unless you want to go to their offices and they will bring a bottle of champagne, a big check and a private banker. And the purpose of the private banker is to open you a current account that's going to be anonymous so that, you know, neighbours and people down at the local bank branch don't suddenly know that you're a millionaire because of the lottery. It is optional. You don't have to do that. But a lot of winners that I met over the years would opt for that. And that's the exciting bit. That's the bit where they try and persuade you to take publicity, take photos of you popping the champagne and holding the big check.

5:57And then you're given about two weeks. So two weeks to sort of go on a bit of a come down after that initial meeting. And then what they will invite you to sit down with a financial advisor and a lawyer, either at home, but typically in the offices. And that was where I came in. So in the southeast, I would do those meetings alongside a lawyer. What the operator was trying to do, so Camelot, when I was working on the account, was try and help their winners not to make those fundamental mistakes. When you have that kind of money dropped on you and you perhaps have no experience of legal services or financial services or banking it's super easy to make very quick very big mistakes with the money and so you it was really a protection measure to try and get across as much information as we could um in the time that we had i'm going to get into your your involvement in a bit but just let's say i won 10 million is that 10 million just dropped into the bank account on day one do i pay tax on it How does the actual process of the money work?

7:01Yeah, so it's very different in the UK. So the win is completely tax-free. Yes, you can opt for it to land in your standard current account. That's completely open for you as a winner to do that. There are some fairly serious reasons why you might not want to do that. When I was first working with the lottery, which was 20 years ago now, we didn't have banking apps. We didn't have the national lottery app. So you would have to go into the bank branch. So people locally could find out that you're a winner. And that was something that if you hadn't opted for publicity, and most winners don't opt for publicity, could be quite dangerous, actually, if people locally found out that you were a winner.

7:39It led to all sorts of negative outcomes. That's really interesting that you say most people do not opt for publicity. Is that right? Yeah, correct. So Camelot were always a little bit careful about the stats, but there's some publicly available information from one of the winner's advisors, actually, the lead winners advisor and he always said it was about 15 % of winners that opted for publicity now he's met many many more winners than I ever did I would say that's probably a bit optimistic I from the winners I met over the decade that I was doing it I would say it was probably less than five percent maybe I think most of the I think in fact all of the winners I ended up having a long-term professional relationship with none of them had taken publicity interesting so let's talk about your role Matt what what how were you involved with these winners what support did you offer them yeah so we would um we'd receive a sheet of A4 paper that would have first name on if it was a married couple then a couple of first names rough ages rough idea of what they had going on financially um for them already and for the lawyer where they had a will lasting power of attorney in place and the size of the win and when I was doing it typically it was it was just exactly a million pounds that was being paid out.

8:55That would tend to be the win. We did see some larger ones, saw some very, very large ones over the years, but most frequently that was the amount. We didn't ever get any more information than that. There was no follow-up information, no contact information, no surnames. They would very often come into our offices or into the lawyer's office to keep that anonymity. And in the time we were given, we were literally trying to educate them get across absolutely everything that ordinarily they would have learned by building money up slowly over time and that was often that was often the most difficult bit of the job to be honest you've got people who sometimes have never dealt with money before and so the amount of concepts that you've got to get across to them in in a short space of time is really difficult i imagine you'd sort of rationally think that those conversations would be about economics and objective things like that but I guess what you learned over the years is that it was also a lot about psychology and emotion.

9:53Yeah of course so I mean genuinely the most miserable man I've met in 25 years for advising and I don't think I particularly meet above average happiness people but I went he was actually slightly out of my area but I was covering for a colleague who was who was off on holiday or ill and I'd had the winner's information sheet it had the details for a married couple i walked into the room and it was just a man there so that's immediately that's a red flag straight away for any of these meetings because if both of them haven't turned up there's some things going on um there straight away and i went in and he was he looked really unhappy and that is not the demeanor typically of these lottery winners it's two weeks after the win yes they're on a bit of a come down but they've had a they've been on a huge high and we were always taught in those meetings the very first question you ask is tell me about how you found out about the win because typically that will elicit this wonderful story of they'd seen a sign a couple of weeks before and they knew they were going to win and then they found out and then they waited till their spouse got home and then teased them by saying they'd won a small amount and then showed them the bigger amount often all these wonderful very individual stories positive emotional stories would come out with this guy there was none of that.

11:09He was just really in a bad place psychologically. And as we started to unpack it, it became clear really quickly that this win was actually genuinely, and I appreciate it's hard to gather sympathy for a lottery winner, but it really was upending his life. So he was one of those who hadn't opted for publicity. But back in those days, you could get your ticket checked in the shop, in the news agents. And he had checked his ticket, obviously not knowing that it was a big win. And those lottery machines did make a noise when you won.

11:52Matt Pitcher: Congratulations. Unfortunately, although the news agents were sworn to secrecy if they had the Camelot contract, it had become known that it was a big win. He lived in a small village, small community where everyone knew each other. The news spread very quickly. I mean, even by the time I met him, news has spread and people had started coming to him asking for help. It was starting to affect family relationships. It was starting to affect his friendships. People were coming forward from the community that he knew who all had a really good reason why he should help them out financially. You know, local businesses that needed a bit of a boost, a bit of a short-term loan, otherwise they were going to go bust and jobs were going to be affected.

12:32People who live locally who, you know, maybe needed treatment for a child and And that could only happen overseas and that needed funding. And individually, each one of those people were really, you know, they had a really good reason to ask for the money. But of course, collectively, if he started to pick and choose, that was immediately affecting things for him. And it was just shifting his entire way of being locally. He was ready to retire actually financially. So, well, the money could be useful to him, but actually he was pretty well set up financially. had a modest life, modest final salary pensions and he was good at the point he won.

13:12The really sad thing for him is eventually he did have to move out of area. It just all became too much for him and his wife. They moved away from the community that they had spent all of their decades of life living in, moved away from family who were still all living locally. And I mean, never mind the cost and upheaval of that, it just meant they were starting their retirement without a without a community you mentioned you know you've dealt with many many many winners it's hard it's hard to imagine someone feeling negative after a win but is that an emotion you've perhaps seen more than you might expect i guess it depends how we define happy right so short-term happiness most of them had achieved some short-term happiness so most of them even before they'd met me had run out and bought a brand new car you know the average lottery winner of those big winners buys somewhere between four and five new cars but that is very short-term happiness so what a lot of those winners didn't know because they hadn't had it happen to them before is that kind of purchase that gets you on the hedonic treadmill so this concept that you you get this initial high but you come down very quickly from it which means you're seeking the next high and if you've decided that buying things is the way you're going to get that then that's the hedonic treadmill so you just keep buying things to get the next high crashing down faster and faster each time and you just become well you can imagine you can run out of a lottery win pretty quickly actually if you're if you're buying things rather than experiences

14:53now the hedonic treadmill is this phenomenon where new and novel things that seem great when we first encounter them, start to lose their attraction over time. Cassie Holmes mentions this in her book, Happier Hour. She writes that we humans have a powerful propensity to adapt after continued and repeated exposure. Seeing the same thing, doing the same thing, or being with the same person again and again lowers its impact on our emotional experience. Put simply, we get used to things over time. The social psychologist Philip Brickman was the first to use the term hedonic treadmill and he did so in the early 70s.

15:31Interestingly one of his first studies on the hedonic treadmill was actually with lottery winners. He gathered 22 state lottery winners from Illinois and they had won between$50 ,000 to a million dollars. He then had a control group of 22 non-winners from the same neighbourhoods and then he gathered a group of 29 paraplegics, people who'd been through sort of serious medical trauma within the past 12 months. He compared the happiness of all groups and he found that lottery winners were no happier on average than non-winners. So if you've just won the lottery, you survey the lottery winners after a few months after winning them, survey normal people, you find that their happiness is about the same level.

16:11And interestingly, the lottery winners actually expected to be less happy in the future than the paraplegics did. Berkman concluded that this was due to the hedonic treadmill. After time, the lottery win will fade off and lottery winners' happiness returns to normal. There is plenty of evidence to back this up. In Happier Hour, Cassie Holmes writes that researchers have concluded that a significant raise in income does produce a significant initial lift in happiness, but within four years, their happiness returns to baseline levels. Now, that's not to say that Matt never met a happy lottery winner.

16:47He met plenty of winners who were very happy to begin with. and one of the winners that stood out in his mind was a man who became obsessed with a certain car yeah so so this was the lime green uh lamborghini lovely lovely man he he just had this vision a lot of the work we do with lottery winners and with other clients is about visualizations it's about visualizing what's going to make you happy and what you want the future to hold for you and i didn't have to do that with this guy because from right from that very first meeting he had his visualization nailed he wanted a lime green lamborghini and he wanted somewhere to to keep it and his vision was that he would buy a property to a barn ideally somewhere where he could live it was on a single story where essentially the car lived one side of the accommodation he lived the other side and there was a glass wall between the two and in his mind what he would do is he would sit and look at the car all day long the fantastic i mean i got to know him a little bit over the time we had together and he he didn't have a driving license um that was the extraordinary thing so unlike most of the winners who were buying cars to to to drive them i mean you can't drive them very fast in the uk to be honest but you know to have that experience it wasn't about for him the the essence of the happiness wasn't the experience of of driving the car it was pure ownership it was purely owning something that prior to the win he couldn't own the sad thing for him actually was that i mean that was his entire wind gone you know a house to show off the car to himself and the car i think the sad thing was that he post-purchase what he hadn't realized is that that happiness drops off very quickly i mean it drops off faster than the value of the car as you're driving off the lot or in his case having it delivered off the lot i think for him there was regret longer term or even medium term we've spoken about cars we've spoken about houses what are some of the other obvious visions and investments that lottery winners tend to make i think it all does boil down to time ultimately and experiences um to be honest so the happiest lottery winners i ever dealt with were people who had their lives already fairly sorted and they just slotted the win into what they're already doing very often and they bought the house, maybe they still had the mortgage, you know, they had pensions, they were doing the things that we advised them to do already, and the wind slotted in.

19:15And what it enabled them to do was just tweak how they were living life. So yes, the mortgage was gone, in most cases, some of them upgraded the house, not all, some of them were happy, the houses they had. Probably the happiest winners were the ones who actually went part-time, rather than rather than committing to just resigning and telling your boss where to stick it. About two-thirds of lottery winners, certainly in the US, don't even reduce their hours at work. Most just carry on doing what they were doing previously. It's only about a third that either reduce or resign. And in fact, we've had a very recent, very public winner here in the UK who had a year post-win.

19:54He'd resigned his job at McDonald's as a burger flipper. And after about a year, 18 months, it was just come out in the press. he's gone back to flipping burgers i think probably for me the most sort of powerful investment of money that i ever saw i mean that's certainly the single best investment i ever saw anyone make um was a young couple who were both working young family so typical thing they use their wind to to stop working both of them and to do some home improvements around the house they didn't move they just just spent some money on the existing house and for them that was all about their their young young child who actually had some um has some very serious health issues that was the reason why they both gave up work and actually their win was gone in 18 months and they spent it all because of the home improvements and and being off of work and having nil income for that time but after 18 months their child was gone as well so they had effectively traded in their win for 18 months of high quality round the clock time with their child you know time that they wouldn't ever have been able to get or afford frankly without that lottery win so it was incredibly good timing for them if it had come earlier it probably wouldn't have covered them for long enough.

21:20If it had come later, of course, it would have been too late for them as a family. So just the perfect timing for them to win the lottery. And I mean, yeah, they're now back to doing everything they were doing before and, you know, not financially struggling, but in the same position they were pre-win. But they'll have those memories forever. ever.

21:45There are good and bad ways to spend the winnings, but I wondered if meeting all these lottery winners had changed Matt's behaviour. We'll find out after the break. Frictionless Growth Marketing, hosted by Sonia Thompson, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. On Frictionless Growth marketing, you'll hear important topics like belonging, customer experience and diversity, and how you can practice inclusive marketing authentically. So go and listen to Frictionless Growth Marketing wherever you get your podcasts. Welcome back, you're listening to Nudge with me, Phil Agnew.

22:29Matt has spent more time than most of us meeting winners of lotteries. He's seen some make great decisions and some make some pretty poor decisions. So has all that experience changed how he lives his life? I asked him. Yes, you think after 10 years of dealing with lottery winners, I'd be this then like human being that had everything sorted. I'm pleased to tell you it's not the case at all. We're all messy as human beings, aren't we? I mean, I think the first thing, so there's a brilliant piece of research out of American University about Canadian lottery winners. And the thing about some of the lottery winners, particularly in America and Canada and some of the other territories, is that there isn't the option for no publicity.

23:13In fact, in Jamaica, a lot of the winners have got into the habit of turning up with masks on because it's full publicity. So they're just trying to hide their identity.

23:21Matt Pitcher: And here's what he did. He won the super lotto in his home country and wore the mask here from the horror movie Scream to claim is$158.4 million. And this study with Canadian lottery winners, they looked at the big lottery winners and they looked at their neighbourhood because there's this concept. I know a lot of people believe in this myth that lottery winners go bust. I mean, they don't actually go bust at any greater a rate than the general population, actually, if you look at the data. But what they did find is they found that the neighbours of lottery winners in Canada, close neighbours actually did go bankrupt at a much higher rate than the average in the population.

24:05And what they found out was that as soon as the neighbour had won the money, they would do an extension, pay off the mortgage, you know, do some nice things to the house, buy two new cars, which would sit on the drive outside the house. Often the neighbours wouldn't know the reason why they'd done that. Sometimes they would. But the neighbours, even though they weren't lottery winners would do the extension, do some nice work to the house, buy two new cars. To do that, they take out greater rates of debt, they take more risk with their investments, and ultimately then went bankrupt in higher numbers than average.

24:40The study from 2020 looked at 7 ,000 lottery winners from between 2004 to 2014. They looked only at the neighbourhoods with a single lottery win, and they left out cases where the winners themselves went bankrupt. They found that each extra$1 ,000 in lottery winnings was followed by a 2.4 % rise in bankruptcy filings amongst the winners' neighbours over the next few years. And that's not all. These neighbours who went bankrupt seemed to hold significantly more visible assets like cars and motorcycles. In other words, the neighbours follow in herd-like behaviour. here. They match their spending to the spending of the lottery winning friends and they go bankrupt because of it.

25:25I did see that a lot with the lottery winners in the UK that I'd dealt with. So the one thing I took away from that is a lack of, I guess, materialism in my own life. So I'm not someone who goes and buys new cars all the time, someone who's very invested, frankly, in objects, in things. And that is a change I have made. I suppose the other big change for me is being a bit more intentional about my time particularly with friendships so carving out time and being the one i'm typically the one that that prompts the the meeting with friends so i'm the one that will nudge create the time we'll go and spend some time together in relationship to invest and build those friendships um i i'm the father of two teenagers and having teenagers um is uh quite unrelentingly um difficult at times i would say i mean they're they're lovely humans um outside of the house um it's just with their parents um they're very often not so i haven't yet sussed the how you spend time with family and make that a you know really pleasurable um experience to be perfectly honest with you i'm just just opening the kimono so yeah i mean i'm a work in progress I would say.

26:42That is all for today's episode, folks. Thank you so much for listening and massive, massive thank you to Matt for coming on today's show. If you want to find out more about Matt or his company, Altor Wealth, then head to the show notes and also look up his TED Talk. It's a brilliant TED Talk. It's how I found Matt. And if you just search Matt Pitcher on YouTube, you will find him. Now, I have two book recommendations for you today. Happier Hour, which I cited a few times in the show, and Happy Money by Elizabeth Dunn and Mike Norton, two previous Nudge guests. Both are fantastic books. They cover studies into happiness.

27:15They look at the major studies on spending your money and your time to see what really drives happiness. And if I ever win the lottery, I'll be reading both of those books again. They're really, really fantastic, and I'd recommend them. If you enjoyed today's show, you'll love those books. that's all for this week but there is much much more coming to nudge soon next up i will have cornell professor vanessa bonds back on the show she's talking to me about her latest book i'm also joined by a senior hostage negotiator who's coming on to talk about the psychology of persuasion australian filmmaker bo miles is coming on the show and one of my favorite marketers nancy harhart is coming back on as well to make sure you don't miss any of those shows please do subscribe to Nudge wherever you get your podcasts and also consider signing up to the newsletter.

28:03Just go to nudgepodcast.com and click newsletter to sign up. If you do, you'd not only get a message from me every single time a new episode goes live, you also get my weekly Friday newsletter with the best behavioural science tip I've found that week. That is all for me this week. Thank you for listening to Nudge. I'll be back next Monday with another episode. Cheers.