Lucky in Life, Unlucky in Love?: The Effect of Random Income Shocks on Marriage and Divorce

Authors:
  • SHScott Hankins
    Scott Hankins
  • MHMark Hoekstra
    Mark Hoekstra
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Abstract
Economists have long been interested in the extent to which economic resources affect decisions to marry and divorce. However, this issue has been difficult to address empirically due to a lack of exogenous income shocks. We overcome this problem by exploiting the randomness of the Florida Lottery and comparing recipients of large prizes to those of small prizes. Results indicate that while positive income shocks of $25,000 to $50,000 do not cause statistically significant or economically meaningful changes in divorce rates, single women are less likely to marry as a result of the additional income.