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Income, Relative Income, and Self-Reported Health in Britain 1979-2000

  • Hugh Gravelle
  • Matt Sutton

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.

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Paper provided by Department of Economics, University of York in its series Discussion Papers with number 06/06.

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Date of creation: Mar 2006
Date of revision:
Handle: RePEc:yor:yorken:06/06
Contact details of provider: Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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  1. Craig, Neil, 2005. "Exploring the generalisability of the association between income inequality and self-assessed health," Social Science & Medicine, Elsevier, vol. 60(11), pages 2477-2488, June.
  2. Gravelle, Hugh & Wildman, John & Sutton, Matthew, 2002. "Income, income inequality and health: what can we learn from aggregate data?," Social Science & Medicine, Elsevier, vol. 54(4), pages 577-589, February.
  3. Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, vol. 93(2), pages 321-24, May.
  4. Benzeval, Michaela & Judge, Ken, 2001. "Income and health: the time dimension," Social Science & Medicine, Elsevier, vol. 52(9), pages 1371-1390, May.
  5. Hey, John D & Lambert, Peter J, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 567-73, November.
  6. 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.
  7. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
  8. Jennifer M. Mellor & Jeffrey Milyo, 1999. "Re-Examining the Evidence of an Ecological Association between Income Inequality and Health," Discussion Papers Series, Department of Economics, Tufts University 9922, Department of Economics, Tufts University.
  9. Paula K. Lorgelly & Joanne Lindley, 2008. "What is the relationship between income inequality and health? Evidence from the BHPS," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 249-265.
  10. Wilkinson, Richard G & Pickett, Kate E., 2006. "Income inequality and population health: A review and explanation of the evidence," Social Science & Medicine, Elsevier, vol. 62(7), pages 1768-1784, April.
  11. Chang, Virginia W. & Christakis, Nicholas A., 2005. "Income inequality and weight status in US metropolitan areas," Social Science & Medicine, Elsevier, vol. 61(1), pages 83-96, July.
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