- Estimating the effect of income on health and mortality using lottery prizes as exogenous source of variation in income
- Scholar Working Paper Series
- WP 40/03
- Number of pages
- University of Amsterdam
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
A vast literature has established a strong positive relation between income and health status and a negative relation with mortality. This paper studies the effects of income on health and mortality, using only the part of income variation due to a truly exogenous factor: monetary lottery prizes of individuals. The findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used. A 10-percent income increase improves health by about 4-5 percent of a standard deviation.
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