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Aggregation bias-correcting approach to the health–income relationship: Life expectancy and GDP per capita in 148 countries, 1970–2010

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  • Linden, Mikael
  • Ray, Devdatta

Abstract

A large amount of data consisting of 148 countries for the years 1970 to 2010 is analysed in the context of the health–income relationship. The literature suggests that the biased income–health effect obtained with macro data can be a result of the aggregation of individual concave income functions on average health. This aggregation problem is analysed in detail, and a bias-correcting method is proposed to overcome it. The results with new model alternatives show that they correct the income effects on average health in the right direction; that is, they produce smaller parameter estimates than biased models. Augmenting the results with the quantile regression approach, which is sensitive to health differences between countries, indicates that the poorest countries’ income gradient is still much larger than that of rich countries. However, the median life expectancy effect of the log of GDP per capita across the countries decreased during the sample decennials. The results for income inequality measured with the Gini coefficient indicate that the effects of inequality on health are still significant in the poorest countries but non-significant among rich countries after the year 2000. We argue that the proposed bias-correcting method retains the interest in macro health modelling and offers new model alternatives in other contexts.

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  • Linden, Mikael & Ray, Devdatta, 2017. "Aggregation bias-correcting approach to the health–income relationship: Life expectancy and GDP per capita in 148 countries, 1970–2010," Economic Modelling, Elsevier, vol. 61(C), pages 126-136.
  • Handle: RePEc:eee:ecmode:v:61:y:2017:i:c:p:126-136
    DOI: 10.1016/j.econmod.2016.12.001
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    Cited by:

    1. Aqsa Mehmood & Hafiz Muhammad Abubakar Siddique & Amjad Ali, 2022. "Impact Of Health On Worker Productivity: Evidence From South Asia," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(2), pages 1-8, June.
    2. Hafiz Muhammad Abubakar Siddique & Ghulam Mohey-ud-din & Adiqa Kiani, 2018. "Health, Education and Economic Growth Nexus: Evidence from Middle Income Countries," Global Social Sciences Review, Humanity Only, vol. 3(4), pages 68-86, December.
    3. Rafia Shafi & Samreen Fatima, 2019. "Relationship between GDP, Life Expectancy and Growth Rate of G7 Countries," International Journal of Sciences, Office ijSciences, vol. 8(06), pages 74-79, June.
    4. Wang, Shaobin & Ren, Zhoupeng & Liu, Xianglong & Yin, Qian, 2022. "Spatiotemporal trends in life expectancy and impacts of economic growth and air pollution in 134 countries: A Bayesian modeling study," Social Science & Medicine, Elsevier, vol. 293(C).
    5. Devdatta Ray & Mikael Linden, 2018. "Health, inequality and income: a global study using simultaneous model," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-28, December.
    6. Kim, Yonsu & Lee, Yongsoo, 2023. "Economic development, intergenerational mobility, and health in South Korea," Economics & Human Biology, Elsevier, vol. 50(C).
    7. Behera, Deepak Kumar & Dash, Umakant, 2019. "Prioritization of government expenditure on health in India: A fiscal space perspective," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    8. He, Qichun, 2018. "Inflation and health in a Schumpeterian growth model: Theory and evidence," Economic Modelling, Elsevier, vol. 75(C), pages 159-168.
    9. Alberto Bucci & Lorenzo Carbonari & Monia Ranalli & Giovanni Trovato, 2019. "Health and Development," CEIS Research Paper 470, Tor Vergata University, CEIS, revised 24 Mar 2021.

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    More about this item

    Keywords

    Income-related health; Income inequality; Aggregation; Errors-in-variables bias;
    All these keywords.

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • E19 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Other
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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