How Much of an Income Drop Will Take a Life?

Across the social sciences, a particular relationship reoccurs in study after study: As income rises, people are less likely to die, and, as income falls, people are more likely to die. Not surprisingly, then, economists and decision scientists have for years tried to estimate how much of a reduction in income might be enough to result in the loss of a person’s life. There are two main ways to make this estimation. One way involves collecting data about mortality for people with different incomes and then running a regression, controlling for other relevant variables like education and health status. This approach has a problem, though—the effect of income on mortality is hard to tease out. It occurs over the course of time, and difficult-to-measure traits like a tendency for risky or reckless behavior that also affect mortality can be correlated with income. To get around these problems, an alternative method relies on economic theory. This theoretical approach was…

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