IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v134y2017icp307-319.html
   My bibliography  Save this article

Is it vulnerability or economic insecurity that matters for health?

Author

Listed:
  • Rohde, Nicholas
  • Tang, Kam Ki
  • Osberg, Lars
  • Rao, D.S. Prasada

Abstract

This paper contrasts the mental and physical health impacts of vulnerability and economic insecurity. An individual is vulnerable if they are at risk of future absolute material deprivation, while they are insecure if they are threatened by losses in relative status. Using data from the first eleven waves of the Australian HILDA panel, we generate four alternative measures of real or perceived downside economic risk and employ panel data models to estimate their impacts on SF-36 mental and physical health indices. We test our hypotheses using a series of polynomial interactions which allow the effect sizes to vary non-linearly with income. Baseline estimates show that economic risks have consistently negative consequences for both mental and physical health, with the former effect being around three times the size of the latter. However our main finding is that increasing incomes do little to mitigate the sensitivity of health to these risks. This suggests it is mostly the prospect of loss rather than deprivation that impacts upon wellbeing. The finding is important as it helps distinguish between competing models (i.e. Beveridge vs Bismarck) for social insurance.

Suggested Citation

  • Rohde, Nicholas & Tang, Kam Ki & Osberg, Lars & Rao, D.S. Prasada, 2017. "Is it vulnerability or economic insecurity that matters for health?," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 307-319.
  • Handle: RePEc:eee:jeborg:v:134:y:2017:i:c:p:307-319
    DOI: 10.1016/j.jebo.2016.12.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016726811630292X
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ferrie, Jane E. & Shipley, Martin J. & Marmot, Michael G. & Stansfeld, Stephen & Smith, George Davey, 1998. "The health effects of major organisational change and job insecurity," Social Science & Medicine, Elsevier, vol. 46(2), pages 243-254, January.
    2. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    3. Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," School of Economics and Finance Discussion Papers and Working Papers Series 071a, School of Economics and Finance, Queensland University of Technology.
    4. Indranil Dutta & James Foster & Ajit Mishra, 2011. "On measuring vulnerability to poverty," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(4), pages 743-761, October.
    5. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
    6. repec:aph:ajpbhl:10.2105/ajph.2008.157685_9 is not listed on IDEAS
    7. Cremer, Helmuth & Pestieau, Pierre, 2003. "Social insurance competition between Bismarck and Beveridge," Journal of Urban Economics, Elsevier, vol. 54(1), pages 181-196, July.
    8. Clark, Andrew & Knabe, Andreas & Rätzel, Steffen, 2010. "Boon or bane? Others' unemployment, well-being and job insecurity," Labour Economics, Elsevier, vol. 17(1), pages 52-61, January.
    9. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    10. Smith Trenton G. & Stoddard Christiana & Barnes Michael G, 2009. "Why the Poor Get Fat: Weight Gain and Economic Insecurity," Forum for Health Economics & Policy, De Gruyter, vol. 12(2), pages 1-31, June.
    11. Nicholas Rohde & KK Tang & Lars Osberg, 2017. "The self-reinforcing dynamics of economic insecurity and obesity," Applied Economics, Taylor & Francis Journals, vol. 49(17), pages 1668-1678, April.
    12. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    13. Mossakowski, Krysia N., 2008. "Is the duration of poverty and unemployment a risk factor for heavy drinking?," Social Science & Medicine, Elsevier, vol. 67(6), pages 947-955, September.
    14. Berloffa, Gabriella & Modena, Francesca, 2012. "Economic well-being in Italy: The role of income insecurity and intergenerational inequality," Journal of Economic Behavior & Organization, Elsevier, vol. 81(3), pages 751-765.
    15. repec:bla:revinw:v:60:y:2014:i::p:s53-s76 is not listed on IDEAS
    16. Walter Bossert & Conchita D'Ambrosio, 2013. "Measuring Economic Insecurity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1017-1030, August.
    17. Amy Finkelstein & Sarah Taubman & Bill Wright & Mira Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & Katherine Baicker, 2012. "The Oregon Health Insurance Experiment: Evidence from the First Year," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1057-1106.
    18. 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.
    19. Barnes Michael G & Smith Trenton G., 2009. "Tobacco Use as Response to Economic Insecurity: Evidence from the National Longitudinal Survey of Youth," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-29, November.
    20. Lars Osberg & Andrew Sharpe, 2014. "Measuring Economic Insecurity in Rich and Poor Nations," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S1), pages 53-76, May.
    21. Stefan Dercon, 2005. "Risk, Poverty and Vulnerability in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 14(4), pages 483-488, December.
    22. Nicholas C. Barberis, 2013. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 173-196, Winter.
    23. Green, Francis, 2011. "Unpacking the misery multiplier: How employability modifies the impacts of unemployment and job insecurity on life satisfaction and mental health," Journal of Health Economics, Elsevier, vol. 30(2), pages 265-276, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economic insecurity; Health; Income; Panel data; Vulnerability;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • I19 - Health, Education, and Welfare - - Health - - - Other
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:134:y:2017:i:c:p:307-319. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jebo .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.