The Neighbor of a Lottery Winner
Economists have found that your neighbor winning the lottery can have an impact on your own life. For example, let’s say your neighbor wins a $1 million lottery. As soon as they collect the money, they run to the Chevy dealership and buy a brand new, top-of-the-line red Corvette. They let you drive it around the block and you are enamored with its style and power. You watch as their family and friends gush over it in their driveway.
You become jealous. You want a Corvette just like your neighbor or, better yet, you’ll get a sports car that’s better and more expensive than their Corvette, even though you can’t afford it. You’ll draw the attention away from them and on to you. Only then will you be happy and respected.
Snap out of it!
This is the epitome of ‘keeping up with the Joneses’, which has resulted in so much financial hardship in America. Economists have also found that neighbors of lottery winners are significantly more likely to go bankrupt for this very reason.
Why is that?
Jealousy, of course.
Think of a toddler. When they see another toddler with a toy they want, they just take it. They see it. They want it. They take it.
You can’t take someone else’s toy when you’re an adult (or you might get arrested), so you must buy the same toy for yourself or — better yet — a bigger and shinier toy! But you can’t afford it, so now what? You use debt to buy it, which starts you down a path to financial destruction. Six months after you buy it, your other neighbor across the street gets a better toy — because he is jealous of you — and the entire cycle starts again.
New toy. Jealousy. Better Toy. Jealousy. Better toy.
When someone gets a new toy, be happy and congratulate them. Then sit back and watch. Six months later the toy isn’t so shiny and new anymore — but the payments are still due. After a while, the toy gets relegated to the back of the garage and eventually discarded. The enjoyment associated with a new toy purchase eventually wears off — but you still must pay for the toy even after the benefits have diminished.
So what should you do when you see a toy you like? How about renting the toy for a weekend, enjoying the benefits, and then returning it? It’s much cheaper, you get the same experience, and you’ll savor it much more than if you owned it.