Article ID Journal Published Year Pages File Type
5059051 Economics Letters 2014 4 Pages PDF
Abstract
Employing the life satisfaction approach to value physical health, this paper illustrates the use of a subset of windfall income (restricted windfall income) as a substitute for the more conventional household income monetary measure. Results provide no evidence against the exogeneity of restricted windfall income and indicate that the causal effect of income on life satisfaction is substantially higher (and willingness-to-pay estimates substantially lower) when restricted windfall income is used. Further research should be devoted to looking into the presence and size of measurement errors in restricted windfall income. If this bias is large, then the quest for valid and strong instruments will continue.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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