College chances

Will lottery winners spend their windfall on college education?

Only if they win big, according to UC Santa Cruz economists George Bulman and Robert Fairlie, in a working paper published through the National Bureau of Economic Research.

“College is a big capital investment that drives government programs, tax exemptions, and life outcomes,” said Bulman, whose research focuses on why people choose higher education—or not.

U.S. Census Bureau data shows that 63% of students from high-income families attend college compared with 36% from low-income families. This disparity is often attributed to college costs and constraints to getting loans, said Fairlie.

After analyzing federal tax records linked to federal financial aid awards for more than one million children whose parents won $600 or more in the lottery from 2000 to 2013, they found wins less than $100,000 had little effect on college enrollment. Surprisingly, payouts that exceeded the cost of college continued to increase the probability of enrollment; the effect of a $1 million win was much larger than that of a $500,000 win. “Maybe it’s not all about money,” said Fairlie.

“We may need to do more to show people the value of education.”