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 t hat richer people tend to face reduced mortality risk to estimate the break-even cost per life saved of health regulations. If government re quires that the private sector spend more than this break-even cutoff, the risk of dying due to reduced health investment is increased by mo re than it will be reduced by the direct action of the health regulati on. We use panel data to suggest that the relationship between income and the probability of death is greater for poor people than for the r ich. As a consequence, break-even cutoffs are roughly twice as large f or the richest 20% of the population than they are for the poorest 20% . The nonlinearity in the income-to-mortality linkage also implies tha t income transfers between income groups which are ignored in traditio nal cost-benefit analysis will affect the conclusions of health-health analysis significantly.