Lindahl, Mikael. 2005. “Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as an Exogenous Source of Variation in Income.” Journal of Human Resources 40(1): 144-168.

A vast literature has established a strong positive relation between income and health status and a negative relation with mortality. This paper studies the effects of income on health and mortality, using only the part of income variation due to a truly exogenous factor: monetary lottery prizes of individuals. The findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used. A 10 percent income increase improves health by about 4–5 percent of a standard deviation.

Mikael Lindahl is an assistant professor at SOFI, Stockholm University. He thanks Anders Björklund, Anne Möller Dano, Daniel Doherty, Alan Krueger, Edwin Leuven, Olle Lundberg, Maria Melkersson, Hessel Oosterbeek, Helena Persson, Erik Plug, Katarina Richardson, Marianne Sundström, Bas van der Klauuw, Eskil Wadensjö, seminar participants at EALE in Regensburg 1999, ESPE 2000, SOFI, and University of Amstedam, and two anonymous referees for valuable comments and discussions. He is grateful to Maria Melkersson for providing the data on aggregate lottery winnings used in Section IIIA. He also thanks HSFR and Wallander foundation for financial support. The data used in this article can be obtained beginning October 2005 through September 2008 from Mikael Lindahl, Swedish Institute for Social Research, Stockholm University, 106 91 Stockholm. <Mikael.Lindahl@sofi.su.se>.