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How Income Influences Health: Decomposition Based on Absolute Income and Relative Income Effects

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  • Xiaodong Cui

    (Business School, Nanjing Xiaozhuang University, Nanjing 211171, China)

  • Ching-Ter Chang

    (Department of Information Management, Chang Gung University, Taoyuan 33302, Taiwan
    Clinical Trial Center, Chang Gung Memorial Hospital at Linkou, Taoyuan 33305, Taiwan
    Department of Industrial Engineering and Management, Ming Chi University of Technology, New Taipei 24301, Taiwan)

Abstract

Previous research has confirmed a positive association between income and health, but there are still a lot of inconsistencies on how income affects health. Indeed, this impact is caused by overlaying of absolute income and relative income effects, and only by decomposing and comparing their relative importance within an integrated framework can suggestions be made for health inequalities and health intervention. To deal with this issue, using the panel data from the 2011, 2014, and 2017 waves of the Chinese Longitudinal Healthy Longevity Survey (CLHLS), a well-designed research model is established to decompose and explore the impact. Our results indicate that relative income, rather than absolute income, has a significant negative impact on health performance, and that these associations may be causal in nature. The health inequity persists throughout the life cycle, but it remains relatively stable, without significant expansion or convergence. To some extent, the research-proposed models enrich the related literature on associations between income and health, and the empirical results suggest that as China moves to the stage of higher incomes and accelerated aging, the Chinese government should pay more attention to income inequality and be alert to the risks of “income-healthy poverty” traps.

Suggested Citation

  • Xiaodong Cui & Ching-Ter Chang, 2021. "How Income Influences Health: Decomposition Based on Absolute Income and Relative Income Effects," IJERPH, MDPI, vol. 18(20), pages 1-14, October.
    • Handle: RePEc:gam:jijerp:v:18:y:2021:i:20:p:10738-:d:655260
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    5. Chen Lu & Xiaodi Yi & Xiaocui Ren, 2022. "Social Group Differences in the Exposure Risk of COVID-19: A Case Study in Beijing, China," IJERPH, MDPI, vol. 19(3), pages 1-19, January.

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