INCOME EFFECTS AND THE VALUE OF HEALTH

Although valuations of risk should increase with income, hedonic wage studies have not been well suited to assessing this relationship. Usin g survey data on consumer valuations of product safety, this paper ana lyzes the role of income effects for several utility functions. The me thodology developed in this paper assesses the effect of income on the certainty equivalent value of the health effect (income elasticities range from 0.18 to 0.39) and on the risk-money tradeoff for small chan ges in risk (income elasticities range from 0.17 to 0.38). Health stat us is a normal economic good.