Volume 30, Number 3 (Summer) 1995
Mullahy, John, and Jody L. Sindelar. 1995. "Health, Income, and Risk Aversion: Assessing Some Welfare Costs of Alcoholism and Poor Health." Journal of Human Resources 30(3):439-459.
The economics costs of adverse health outcomes have typically been evaluated in a context of risk neutrality, and approach that ignores the potential welfare importance of individuals' risk preferences. This paper presents a framework that unifies the research in health capital and earnings with that on risk preferences in the presence of stochastic outcomes. The model is implemented to obtain estimates of the economic damages due both to general health problems as well as to one specific health problem that is of considerable interest from society's perspective: alcoholism.
John Mullahy is an associate professor of economics at Trinity College, and a researcher at Resources for the Future, and the national Bureau of Economic research. Jody L. Sindelar is an associate professor of economics at Yale University and a researcher at the national Bureau of economic Research. Mullahy's research was supported in part by a University Fellows grant from resources for the Future. The research reported here has been supported in part by Grant R01AA08394 from the U.S. National Institute on Alcohol Abuse and Alcoholism to Yale University. Many thanks are owed to Phil Cook, Bill Evans, Michael Grossman, Don Kenkel, Paul Portney, Roger Sherman, John Strauss, seminar participants at Johns Hopkins, Vanderbilt, and the Rochester Health Economics Workshop, and two anonymous referees for their insightful comments and helpful suggestions on earlier drafts, and to Maureen Cropper and Rick Freeman for guidance on the guidance on the literature. The data used in this article can be obtained beginning in December 1995 through December 1998 from John Mullahy at Department of economics, Trinity College, 300 Summit St., Hartford, CT 06106.
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