IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Do Socioeconomic Factors Really Explain Income-Related Inequalities in Health? Applying a Twin Design to Standard Decomposition Analysis

The concentration index and decomposition analysis are commonly used in economics to measure and explain socioeconomic inequalities in health. Such analysis builds on the strong assumption that a health production function can be estimated without substantial bias implying that health is caused by socioeconomic outcomes, which is hard to prove. This article contributes to the decomposition literature by applying a twin design to standard decomposition analysis of socioeconomic health inequalities in Sweden. The twin-based decomposition estimates, which control for unobserved endowments at the twin-pair level, are much lower in magnitude than estimates obtained via typical OLS on the same sample. This demonstrates that OLS-based decompositions are severely upward biased due to underlying confounders, exaggerating the contribution of income and education to health inequality, which in turn limits the usefulness of such decompositions for policy purposes.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Lund University, Department of Economics in its series Working Papers with number 2012:21.

in new window

Length: 42 pages
Date of creation: 20 Aug 2012
Date of revision:
Publication status: Forthcoming as Gerdtham, Ulf-G, Petter Lundborg, Carl Hampus Lyttkens and Paul Nystedt, 'Do Socioeconomic Factors Really Explain Income-Related Inequalities in Health? Applying a Twin Design to Standard Decomposition Analysis' in Scandinavian Journal of Economics.
Handle: RePEc:hhs:lunewp:2012_021
Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Neil J. Buckley & Frank T. Denton & A. Leslie Robb & Byron G. Spencer, 2003. "The Transition from Good to Poor Health: An Econometric Study of the Older Population," Social and Economic Dimensions of an Aging Population Research Papers 94, McMaster University.
  2. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
  3. Sandra E. Black & Paul J. Devereux & Kjell Salvanes, 2005. "From the Cradle to the Labor Market? The Effect of Birth Weight on Adult Outcomes," NBER Working Papers 11796, National Bureau of Economic Research, Inc.
  4. Gerdtham, Ulf-G & Johannesson, Magnus, 2002. " Do Life-Saving Regulations Save Lives?," Journal of Risk and Uncertainty, Springer, vol. 24(3), pages 231-49, May.
  5. Meghir, Costas & Palme, Mårten & Simeonova, Emilia, 2012. "Education, Health and Mortality: Evidence from a Social Experiment," IZA Discussion Papers 6462, Institute for the Study of Labor (IZA).
  6. Deaton, A., 2001. "Health, Inequality, and Economic Development," Papers 200, Princeton, Woodrow Wilson School - Development Studies.
  7. Burstrom, Kristina & Johannesson, Magnus & Diderichsen, Finn, 2001. "Health-related quality of life by disease and socio-economic group in the general population in Sweden," Health Policy, Elsevier, vol. 55(1), pages 51-69, January.
  8. Heather Royer, 2009. "Separated at Girth: US Twin Estimates of the Effects of Birth Weight," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 49-85, January.
  9. Victor R. Fuchs, 1982. "Introduction to "Economic Aspects of Health"," NBER Chapters, in: Economic Aspects of Health, pages 1-12 National Bureau of Economic Research, Inc.
  10. M. Kamrul Islam & Ulf-G. Gerdtham & Philip Clarke & Kristina Burström, 2010. "Does income-related health inequality change as the population ages? Evidence from Swedish panel data," Health Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 334-349.
  11. Dorothe Bonjour & Lynn Cherkas & Jonathan Haskel & Denise Hawkes & Tim Spector, 2002. "Returns to Education: Evidence from UK Twins," CEE Discussion Papers 0022, Centre for the Economics of Education, LSE.
  12. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1, December.
  13. Orley Ashenfelter & Cecilia Rouse, 1997. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," NBER Working Papers 6106, National Bureau of Economic Research, Inc.
  14. Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, vol. 1(1), pages 49-59, March.
  15. Wildman, John, 2003. "Modelling health, income and income inequality: the impact of income inequality on health and health inequality," Journal of Health Economics, Elsevier, vol. 22(4), pages 521-538, July.
  16. Kristina Burström & Magnus Johannesson & Finn Diderichsen, 2005. "Increasing socio-economic inequalities in life expectancy and QALYs in Sweden 1980-1997," Health Economics, John Wiley & Sons, Ltd., vol. 14(8), pages 831-850.
  17. Meer, Jonathan & Miller, Douglas L. & Rosen, Harvey S., 2003. "Exploring the health-wealth nexus," Journal of Health Economics, Elsevier, vol. 22(5), pages 713-730, September.
  18. Erreygers, Guido, 2009. "Correcting the Concentration Index," Journal of Health Economics, Elsevier, vol. 28(2), pages 504-515, March.
  19. Erreygers, Guido, 2009. "Correcting the Concentration Index: A reply to Wagstaff," Journal of Health Economics, Elsevier, vol. 28(2), pages 521-524, March.
  20. Kjellsson , Gustav & Gerdtham, Ulf-G, 2011. "Correcting the Concentration Index for Binary Variables," Working Papers 2011:4, Lund University, Department of Economics.
  21. Gerdtham, Ulf-G. & Johannesson, Magnus, 1999. "Income-Related Inequality in Life-Years and Quality-Adjusted Life-Years," SSE/EFI Working Paper Series in Economics and Finance 334, Stockholm School of Economics.
  22. Webbink, Dinand & Martin, Nicholas G. & Visscher, Peter M., 2010. "Does education reduce the probability of being overweight?," Journal of Health Economics, Elsevier, vol. 29(1), pages 29-38, January.
  23. Andrew Jones & Ángel López Nicolás, 2006. "Allowing for heterogeneity in the decomposition of measures of inequality in health," Journal of Economic Inequality, Springer, vol. 4(3), pages 347-365, December.
  24. Baum II, Charles L. & Ruhm, Christopher J., 2009. "Age, socioeconomic status and obesity growth," Journal of Health Economics, Elsevier, vol. 28(3), pages 635-648, May.
  25. 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.
  26. Wagstaff, Adam & Van Doorslaer, Eddy & Watanabe, Naoko, 2001. "On decomposing the causes of health sector inequalities with an application to malnutrition inequalities in Vietnam," Policy Research Working Paper Series 2714, The World Bank.
  27. Holmlund, Helena & Lindahl, Mikael & Plug, Erik, 2008. "The Causal Effect of Parent's Schooling on Children's Schooling: A Comparison of Estimation Methods," IZA Discussion Papers 3630, Institute for the Study of Labor (IZA).
  28. Petter Lundborg, 0000. "The Health Returns to Education - What can we learn from Twins?," Tinbergen Institute Discussion Papers 08-027/3, Tinbergen Institute.
  29. Joan Costa-Font & Daniele Fabbri & Joan Gil, 2008. "Decomposing Body Mass Index Gaps Between Mediterranean Countries: A Counterfactual Quantile Regression Analysis," Working Papers 2008-11, FEDEA.
  30. Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "The causal effect of income on health: Evidence from German reunification," Journal of Health Economics, Elsevier, vol. 24(5), pages 997-1017, September.
  31. Miller, Paul & Mulvey, Charles & Martin, Nick, 2005. "Birth weight and schooling and earnings: estimates from a sample of twins," Economics Letters, Elsevier, vol. 86(3), pages 387-392, March.
  32. Kristina Burström & Magnus Johannesson & Finn Diderichsen, 2003. "The value of the change in health in Sweden 1980|81 to 1996|97," Health Economics, John Wiley & Sons, Ltd., vol. 12(8), pages 637-654.
  33. Guido Erreygers & Tom Van Ourti, 2010. "Measuring Socioeconomic Inequality in Health, Health Care and Health Financing by Means of Rank-Dependent Indices: A Recipe for Good Practice," Tinbergen Institute Discussion Papers 10-076/3, Tinbergen Institute.
  34. Jere R. Behrman & Mark R. Rosenzweig, 2004. "Returns to Birthweight," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 586-601, May.
  35. Sandewall, Örjan & Cesarini, David & Johannesson, Magnus, 2009. "The Co-twin Methodology and Returns to Schooling – Testing a Critical Assumption," Working Paper Series 806, Research Institute of Industrial Economics.
  36. 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.
  37. David M. Cutler & Adriana Lleras-Muney & Tom Vogl, 2008. "Socioeconomic Status and Health: Dimensions and Mechanisms," NBER Working Papers 14333, National Bureau of Economic Research, Inc.
  38. Ulf-G. Gerdtham & Magnus Johannesson, 2004. "Absolute Income, Relative Income, Income Inequality, and Mortality," Journal of Human Resources, University of Wisconsin Press, vol. 39(1).
  39. Amin, Vikesh & Lundborg, Petter & Rooth, Dan-Olof, 2011. "Mothers Do Matter: New Evidence on the Effect of Parents' Schooling on Children's Schooling Using Swedish Twin Data," IZA Discussion Papers 5946, Institute for the Study of Labor (IZA).
  40. Eddy van Doorslaer & Xander Koolman, 2004. "Explaining the differences in income-related health inequalities across European countries," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 609-628.
  41. Amin, Vikesh & Lundborg, Petter & Rooth, Dan-Olof, 2011. "Following in Your Father's Footsteps: A Note on the Intergenerational Transmission of Income between Twin Fathers and their Sons," IZA Discussion Papers 5990, Institute for the Study of Labor (IZA).
  42. David E. Bloom & David Canning, 2004. "The Health and Wealth of Africa," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 5(2), pages 57-81, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hhs:lunewp:2012_021. 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: (David Edgerton)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.