published in: Journal of Human Resources, 2005, 40 (1), 144-168
A vast literature has established a strong positive association of income with health status
and a negative association with mortality. This paper studies the effects of income on health
and mortality, using only the part of income variation that is due to a truly exogenous factor:
the monetary lottery prizes of individuals. The findings are that higher income causally
generates good health and that this effect is of similar magnitude as when traditional
estimation techniques are used. A 10 percent increase in income increases good health by
about 0.01-0.02 standard deviations.
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