Do Poor People Have a Stronger Relationship between Income and Mortality Than the Rich? Implications of Panel Data for Health-Health Analysis.

Articles developing health-health analysis have used the observation that richer people tend to face reduced mortality risk to estimate the break-even cost per life saved of health regulations. If government requires that the private sector spend more than this break-even cutoff, the risk of dying due to reduced health investment is increased by more than it will be reduced by the direct action of the health regulation. We use panel data to suggest that the relationship between income and the probability of death is greater for poor people than for the rich. As a consequence, break-even cutoffs are roughly twice as large for the richest 20 percent of the population than they are for the poorest 20 percent. The nonlinearity in the income-to-mortality linkage also implies that income transfers between income groups which are ignored in traditional cost-benefit analysis will affect the conclusions of health-health analysis significantly. Copyright 1996 by Kluwer Academic Publishers