CROSS-COUNTRY ANALYSES DONT ESTIMATE HEALTH-HEALTH RESPONSES

Health-Health analysis has attracted considerable attention as one way to evaluate the costs of regulatory policy to people. When a regulati on is adopted to reduce the ''risk'' experienced by a particular group , health-health analysis seeks to evaluate when the indirect effects o f an increase in prices or reduction in income offsets the direct effe cts intended by the regulation. If these indirect effects are large en ough, then the general population can experience an increase in their overall risk. The article considers health-health analysis as it relat es to policy decisions from conceptual and empirical perspectives. A c omparative static analysis was a simple model is used to illustrate th e factors influencing the relative effects of income and policy variab les on risk. The empirical analysis also suggests that results with ag gregate cross-country data and simple reduced-form models for the rela tionship of mortality to income are sensitive to model specifications and the sample composition.