The Economic Determinants of Health Inequalities

It has been argued by several commentators (e.g. Wilkinson, Evans) that psycho-social stress associated with an individual’s relative position in the social and economic hierarchy is a predominant determinant of their health status, with an individual’s absolute level of income of lesser importance. In this paper, we argue that the concentration on psycho-social stress as the primary pathway for health determination neglects a number of important economic pathways for the impact of relative income on health. These economic pathways include firstly the impact on health of positional goods, whose absolute level of consumption is a function of the relative position of an individual in the distribution of income and wealth. One key positional good is that of land, whose consumption level has important health-determining correlates, such as overcrowding, sanitation needs, commuting stress, pollution levels, and mortgage pressures. The second economic pathway involves changes in relative prices associated with rising absolute incomes, which interact with different price and income elasticities for different commodities that possess different health-inducing characteristics, to produce a pattern of health inequalities within and across countries, as a function of relative and absolute income levels, that is similar to that observed. The third economic pathway examined is that of the hysteresis effect of past economic stresses on the current state of individual human capital and relative competitiveness and their associated health levels. Each of these economic pathways is examined, and their importance analysed, in the context of both the Aboriginal population of Australia and inner city areas in the UK, and their associated major health inequalities.