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The relative income hypothesis: does it exist over time? Evidence from the BHPS

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  • Lindley

    (University of Sheffiled)

  • Lorgelly

    (University of East Anglia)

Abstract

The relative income hypothesis suggests that income inequality has a detrimental affect on people’s health. This previously well accepted relationship has recently come under scrutiny. Some claim it is a statistical artefact, while others argue that aggregate level data are not sophisticated enough to adequately test for its existence. This paper adds to the debate by estimating the relationship between income inequality and health using panel data. A random effects ordered probit is used to estimate the relationship between net household income, regional income inequality and self-reported health, for 3736 individuals over 9 years, while controlling for individual socioeconomic characteristics like gender, social class and age. Significant differences in income inequality across regions and considerable changes in health are found across years, however, the panel data estimating regressions find no significant association between any of the measures of income inequality and self-reported health. Therefore, it would appear that the relative income hypothesis does not exist over time and does not exist within Britain.

Suggested Citation

  • Lindley & Lorgelly, 2005. "The relative income hypothesis: does it exist over time? Evidence from the BHPS," Labor and Demography 0510007, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0510007
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    References listed on IDEAS

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    Cited by:

    1. Cristina Hernandez-Quevedo & Andrew M Jones & Nigel Rice, "undated". "Reporting Bias and Heterogeneity in Self-Assessed Health. Evidence from the British Household Panel Survey," Discussion Papers 04/18, Department of Economics, University of York.
    2. Khadija Shams, 2015. "Income and Health Satisfaction: Evidence from Rural Pakistan," Journal of Happiness Studies, Springer, vol. 16(6), pages 1455-1474, December.
    3. Khadija Shams, 2015. "The relationship between economic and health indicators in Rural Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(3), pages 1121-1134, May.
    4. Jones, Andrew M. & Wildman, John, 2008. "Health, income and relative deprivation: Evidence from the BHPS," Journal of Health Economics, Elsevier, vol. 27(2), pages 308-324, March.
    5. Maria Mercedes Teijeiro Álvarez (ed.), 2013. "Investigaciones de Economía de la Educación," E-books Investigaciones de Economía de la Educación, Asociación de Economía de la Educación, edition 1, volume 8, number 08, Winter.

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    • J - Labor and Demographic Economics

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