Write an essay between 1000 and 1500 words on the topic provided below. The topic is associated with two, fairly short, academic papers. This assignment should be in essay form with an introduction, body, and conclusion. You should imagine yourself to be writing for an economics “lay” audience – i.e. an interested, educated audience but one that has not been trained in economics.
Winning a lottery is an example of a positive income shock that generates a pure income effect since it has no effect on a worker’s market wage. If leisure is a normal good, people who have experienced a large, unanticipated shock to their non-human wealth should work less than similar people who did not. However, a 2012 paper by Furaker and Hedenus found fairly ambiguous and heterogenous effects of winning the lottery on work behavior among a sample of Swedish lottery winners. In a companion study, Hedenus also found that both socio- economic status and negative perception of the current job made Swedish lottery winners more inclined to quit following a lottery win.
You should start by describing Furaker and Hedenus’ and Hedenus’ basic results. Are the findings of the two studies surprising to somebody who has studied basic microeconomics consumer theory (in particular the labor-leisure model)? What do they imply about people’s attitudes toward leisure? Would you expect a study of lottery winners in the US or Canada to yield similar findings?
Sample Solution
