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Income, relative income, and self-reported health in Britain 1979-2000

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  • Hugh Gravelle

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

  • Matt Sutton

    (Health Economics Research Unit, University of Aberdeen)

Abstract

According to the relative income hypothesis, an individual’s health depends on the distribution of income in a reference group, as well as on the income of the individual. We use data on 231,208 individuals in Great Britain from 19 rounds of the General Household Survey between 1979 and 2000 to test alternative specifications of the hypothesis with different measures of relative income, national and regional reference groups, and two measures of self assessed health. All models include individual education, social class, housing tenure, age, gender and income. The estimated effects of relative income measures are usually weaker with regional reference groups and in models with time trends. There is little evidence for an independent effect of the Gini coefficient once time trends are allowed for. Deprivation relative to mean income and the Hey-Lambert-Yitzhaki measures of relative deprivation are generally negatively associated with individual health, though most such models do not perform better on the Bayesian Information Criterion than models without relative income. The only model which performs better than the model without relative income and which has a positive estimated effect of absolute income on health has relative deprivation measured as income proportional to mean income. In this model the increase in the probability of good health from a ceteris paribus reduction in relative deprivation from the upper quartile to zero is 0.010, whereas as an increase in income from the lower to the upper quartile increases the probability by 0.056. Measures of relative deprivation constructed by comparing individual income with incomes within a regional or national reference group will always be highly correlated with individual income, making identification of the separate effects of income and relative deprivation problematic.

Suggested Citation

  • Hugh Gravelle & Matt Sutton, 2006. "Income, relative income, and self-reported health in Britain 1979-2000," Working Papers 010cherp, Centre for Health Economics, University of York.
  • Handle: RePEc:chy:respap:10cherp
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    7. Karlsdotter, Kristina & Martín Martín, José J. & López del Amo González, M. Puerto, 2012. "Multilevel analysis of income, income inequalities and health in Spain," Social Science & Medicine, Elsevier, vol. 74(7), pages 1099-1106.
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    9. Hilda Osafo Hounkpatin & Alex Wood & Gordon Brown & Graham Dunn, 2015. "Why does Income Relate to Depressive Symptoms? Testing the Income Rank Hypothesis Longitudinally," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(2), pages 637-655, November.
    10. Elena Bárcena-Martín & Cortés Aguilar Alexandra & Ana I. Moro Egido, 2013. "The role of proximity and social comparisons on subjective well-being," ThE Papers 13/10, Department of Economic Theory and Economic History of the University of Granada..
    11. Adjaye-Gbewonyo, Kafui & Kawachi, Ichiro, 2012. "Use of the Yitzhaki Index as a test of relative deprivation for health outcomes: A review of recent literature," Social Science & Medicine, Elsevier, vol. 75(1), pages 129-137.
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    15. Boone, Jan, 2020. "Pricing above Value: Selling to an Adverse Selection Market," Discussion Paper 2020-023, Tilburg University, Center for Economic Research.
    16. Joan Costa-i-Font & Cristina Hernandez-Quevedo & Azusa Sato, 2013. "A 'Health Kuznets' Curve'? Cross-Country and Longitudinal Evidence," CESifo Working Paper Series 4446, CESifo.
    17. Boone, Jan, 2020. "Pricing above Value: Selling to an Adverse Selection Market," Other publications TiSEM 700b2f3e-d1c8-4422-9b54-f, Tilburg University, School of Economics and Management.
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    19. Cristina Blanco Pérez & Xavier Ramos, 2010. "Polarization And Health," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(1), pages 171-185, March.
    20. Kuo, Chun-Tung & Chiang, Tung-liang, 2013. "The association between relative deprivation and self-rated health, depressive symptoms, and smoking behavior in Taiwan," Social Science & Medicine, Elsevier, vol. 89(C), pages 39-44.
    21. Hounkpatin, Hilda Osafo & Wood, Alex M. & Dunn, Graham, 2016. "Does income relate to health due to psychosocial or material factors? Consistent support for the psychosocial hypothesis requires operationalization with income rank not the Yitzhaki Index," Social Science & Medicine, Elsevier, vol. 150(C), pages 76-84.

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    More about this item

    Keywords

    relative income; relative deprivation; income inequality; health.;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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