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Income Effects and the Value of Health

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  • William N. Evans
  • W. Kip Viscusi

Abstract

Although valuations of risk should increase with income, hedonic wage studies have not been well suited to assessing this relationship. Using survey data on consumer valuations of product safety, this paper analyzes the role of income effects for several utility functions. The methodology developed in this paper assesses the effect of income on the certainty equivalent value of the health effect (income elasticities range from 0.18 to 0.39) and on the risk-money tradeoff for small changes in risk (income elasticities range from 0.17 to 0.38). Health status is a normal economic good.

Suggested Citation

  • William N. Evans & W. Kip Viscusi, 1993. "Income Effects and the Value of Health," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 497-518.
    • Handle: RePEc:uwp:jhriss:v:28:y:1993:i:3:p:497-518
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    Cited by:

    1. Diana W. Thomas, 2019. "Regressive effects of regulation," Public Choice, Springer, vol. 180(1), pages 1-10, July.
    2. Alberto Bennardo & Salvatore Piccolo, 2014. "Competitive Markets With Endogenous Health Risks," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 755-790, June.
    3. Cavatorta, Elisa & Pieroni, Luca, 2013. "Background risk of food insecurity and insurance behaviour: Evidence from the West Bank," Food Policy, Elsevier, vol. 43(C), pages 278-290.
    4. Johannes G. Jaspersen, 2022. "When full insurance may not be optimal: The case of restricted substitution," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1249-1257, June.
    5. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-1296, December.
    6. Elisa Cavatorta, 2010. "A competing risk model for health and food insecurity in the West Bank," Birkbeck Working Papers in Economics and Finance 1013, Birkbeck, Department of Economics, Mathematics & Statistics.
    7. Cam Donaldson & Stephen Birch & Amiram Gafni, 2002. "The distribution problem in economic evaluation: income and the valuation of costs and consequences of health care programmes," Health Economics, John Wiley & Sons, Ltd., vol. 11(1), pages 55-70, January.
    8. Alberto Bennardo & Salvatore Piccolo, 2005. "Competitive occupational choices with endogenous health risks," Levine's Working Paper Archive 784828000000000199, David K. Levine.
    9. Kenkel, Don, 1997. "On valuing morbidity, cost-effectiveness analysis, and being rude," Journal of Health Economics, Elsevier, vol. 16(6), pages 749-757, December.
    10. Steffen Andersen & John Fountain & Glenn Harrison & E. Rutström, 2014. "Estimating subjective probabilities," Journal of Risk and Uncertainty, Springer, vol. 48(3), pages 207-229, June.
    11. Galizzi, Monica & Zagorsky, Jay L., 2009. "How do on-the-job injuries and illnesses impact wealth?," Labour Economics, Elsevier, vol. 16(1), pages 26-36, January.
    12. Yoshiro Tsutsui & Iku Tsutsui-Kimura, 2022. "How does risk preference change under the stress of COVID-19? Evidence from Japan," Journal of Risk and Uncertainty, Springer, vol. 64(2), pages 191-212, April.
    13. Chen, Alice & Lakdawalla, Darius N., 2019. "Healing the poor: The influence of patient socioeconomic status on physician supply responses," Journal of Health Economics, Elsevier, vol. 64(C), pages 43-54.
    14. Dolan, Paul & Edlin, Richard, 2002. "Is it really possible to build a bridge between cost-benefit analysis and cost-effectiveness analysis?," Journal of Health Economics, Elsevier, vol. 21(5), pages 827-843, September.
    15. Glenn C. Blomquist, 2004. "Self-Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy," Review of Economics of the Household, Springer, vol. 2(1), pages 89-110, March.
    16. Jonathan Gruber, 1997. "Health Insurance for Poor Women and Children in the US: Lessons from the Past Decade," NBER Chapters, in: Tax Policy and the Economy, Volume 11, pages 169-211, National Bureau of Economic Research, Inc.
    17. W. Kip Viscusi, 2019. "Utility functions for mild and severe health risks," Journal of Risk and Uncertainty, Springer, vol. 58(2), pages 143-166, June.
    18. Justina A.V. Fischer & Benno Torgler, 2006. "The Effect of Relative Income Position on Social Capital," Economics Bulletin, AccessEcon, vol. 26(4), pages 1-20.
    19. Patel, Pankaj C. & Tsionas, Mike G. & Oghazi, Pejvak, 2023. "Compensating income variation in health and subjective well-being for the self-employed," Journal of Business Research, Elsevier, vol. 160(C).
    20. W. Viscusi & William Evans, 2006. "Behavioral Probabilities," Journal of Risk and Uncertainty, Springer, vol. 32(1), pages 5-15, January.
    21. Gomis-Porqueras, Pedro & Moslehi, Solmaz & Suen, Richard M.H., 2016. "The role of dietary choices and medical expenditures on health outcomes when health shocks are endogenous," Economic Modelling, Elsevier, vol. 54(C), pages 13-25.

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