CHAPTER 21THE THEORY OF CONSUMER CHOICE483in the lottery see large increases in their incomes and, as a result, large outwardshifts in their budget constraints. Because the winners’ wages have notchanged, however, the slopesof their budget constraints remain the same. Thereis, therefore, no substitution effect. By examining the behavior of lottery win-ners, we can isolate the income effect on labor supply.The results from studies of lottery winners are striking. Of those winnerswho win more than $50,000, almost 25 percent quit working within a year, andanother 9 percent reduce the number of hours they work. Of those winners whowin more than $1 million, almost 40 percent stop working. The income effect onlabor supply of winning such a large prize is substantial.Similar results were found in a study, published in the May 1993 issue of theQuarterly Journal of Economics,of how receiving a bequest affects a person’s la-bor supply. The study found that a single person who inherits more than
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