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

Economists have long been interested in determining whether increases in income cause either a stabilizing effect on a couple’s marriage or a destabilizing “independence effect”. However, estimating the effect of income on marital stability is difficult due to a lack of exogenous pure income shocks. To overcome that problem, we compare the divorce rates of winners of large cash prizes through the Florida Lottery to those of winners of small cash prizes. By linking lottery winners from Miami-Dade and Palm Beach counties to public record divorce filings from 1985 to 2007, we show that there is little evidence that positive income shocks of $25,000 to $50,000 cause statistically significant or economically meaningful changes in divorce rates in the 3 years after the income shock despite relatively small standard errors. Acknowledgements: We would like to thank the Florida Lottery for providing us with the data on lottery winners. All errors are our own.