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Measuring income related inequality in health: standardisation and the partial concentration index

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  • Hugh Gravelle

    (National Primary Care Research and Development Centre, Centre for Health Economics, University of York, UK)

Abstract

The partial concentration index (PCI) is commonly used as a measure of income related inequality in health after removing the effects of standardising variables such as age and gender which affect health, are correlated with income, but not amenable to policy. Both direct and indirect standardisation have been used to remove the effects of standardising variables. The paper shows that with individual level data direct standardisation is possible using the coefficients from a linear regression of health on income and the standardising variables and yields a consistent estimate of the PCI. Indirect standardisation estimates the effects of the standardising variables on health from a health regression which excludes income. The coefficients on the standardising variables include some of the effects of income on health if income is correlated with the standardising variables. Using these coefficients to remove the effects of the standardising variables also removes some of the effect of income on health and leads to an inconsistent estimate of the PCI. Indirect standardisation underestimates the PCI irrespective of the signs of the correlations of standardising variables and income with each other and with health. An adaptation of the PCI when the marginal effect of income on health depends on the standardising variables is also proposed. Copyright © 2003 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 12 (2003)
Issue (Month): 10 ()
Pages: 803-819

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Handle: RePEc:wly:hlthec:v:12:y:2003:i:10:p:803-819

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Wagstaff, Adam & van Doorslaer, Eddy & Watanabe, Naoko, 2003. "On decomposing the causes of health sector inequalities with an application to malnutrition inequalities in Vietnam," Journal of Econometrics, Elsevier, vol. 112(1), pages 207-223, January.
  2. Ettner, Susan L., 1996. "New evidence on the relationship between income and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 67-85, February.
  3. Carol Propper & Richard Upward, 1992. "Need, equity and the NHS: the distribution of health care expenditure 1974-87," Fiscal Studies, Institute for Fiscal Studies, vol. 13(2), pages 1-21, February.
  4. Brazier, John & Roberts, Jennifer & Deverill, Mark, 2002. "The estimation of a preference-based measure of health from the SF-36," Journal of Health Economics, Elsevier, vol. 21(2), pages 271-292, March.
  5. Adam Wagstaff & Eddy van Doorslaer, 2000. "Measuring and Testing for Inequity in the Delivery of Health Care," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 716-733.
  6. van Doorslaer, Eddy & Wagstaff, Adam & Bleichrodt, Han & Calonge, Samuel & Gerdtham, Ulf-G. & Gerfin, Michael & Geurts, Jose & Gross, Lorna & Hakkinen, Unto & Leu, Robert E., 1997. "Income-related inequalities in health: some international comparisons," Journal of Health Economics, Elsevier, vol. 16(1), pages 93-112, February.
  7. Wagstaff, Adam & van Doorslaer, Eddy, 2000. "Chapter 34 Equity in health care finance and delivery," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 34, pages 1803-1862 Elsevier.
  8. Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
  9. van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & De Graeve, Diana & Duchesne, Inge & Gerdtham, Ulf-G & Gerfin, Michael & Geurts, Jose & Gross, Lorna, 2000. "Equity in the delivery of health care in Europe and the US," Journal of Health Economics, Elsevier, vol. 19(5), pages 553-583, September.
  10. Matthew Sutton, 2002. "Vertical and horizontal aspects of socio-economic inequity in general practitioner contacts in Scotland," Health Economics, John Wiley & Sons, Ltd., vol. 11(6), pages 537-549.
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