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Health, Income, and Risk Aversion: Assessing Some Welfare Costs of Alcoholism and Poor Health

  • John Mullahy
  • Jody L. Sindelar

The economic costs of adverse health outcomes have typically been evaluated in a context of risk neutrality, an approach that ignores the potential welfare importance of individuals' risk preferences. This paper presents a framework that unifies the research in health capital and earnings with that on risk preferences in the presence of stochastic outcomes. The model is implemented to obtain estimates of the economic damages due both to general health problems as well as to one specific health problem that is of considerable interest from society's perspective: alcoholism.

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Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 30 (1995)
Issue (Month): 3 ()
Pages: 439-459

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Handle: RePEc:uwp:jhriss:v:30:y:1995:i:3:p:439-459
Contact details of provider: Web page: http://jhr.uwpress.org/

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  1. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-43, June.
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