Up from Poverty? The 1832 Cherokee Land Lottery and the Long-run Distribution of Wealth∗

The state of Georgia allocated most of its land to the public through a system of lotteries. These episodes provide unusual opportunities to assess the long-term impact of shocks to wealth, as winning was uncorrelated with individual characteristics and the eligible population was drawn from a broad cross section of adult white males. Using wealth measured in the 1850 Census manuscripts, we follow up on a sample of men eligible to win in the 1832 Cherokee Land Lottery. We assess the impact of lottery winning on the distribution of wealth 18 years after the fact. Winners are on average richer (by an amount close to the median of 1850 wealth), but mainly due to a (net) shifting of mass from the middle to the upper tail of the wealth distribution. The lower tail is largely unaffected. We discuss some possible mechanisms (fixed costs, interactions with ability, risk, and life-cycle consumption patterns) for this result. ∗Draft version. Comments welcome. The authors thank Chris Roudiez for managing some of the transcription, and seminar participants at the University of Chicago and Yale University for helpful comments. We gratefully acknowledge funding support from the Stigler Center and the Center for Population Economics, both at the University of Chicago. †Booth School of Business, University of Chicago. Postal address: 5807 South Woodlawn Avenue, Chicago, Illinois 60637. Electronic mail: bleakley at uchicago dot edu. ‡Department of Economics, Northwestern University. Postal address: 2001 Sheridan Road, Evanston, Illinois 60208. Electronic mail: ferrie at northwestern dot edu.