SUMMARYWe use British panel data to determine the exogenous impact of income on a number of individual health outcomes: general health status, mental health, physical health problems, and health behaviours (drinking and smoking). Lottery winnings allow us to make causal statements regarding the effect of income on health, as the amount won by winners is largely exogenous. Positive income shocks have no significant effect on self-assessed overall health, but a significant positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known gradient in health status in crosssectional data, and second, general health should partly reflect mental health, so that we may expect both variables to move in the same direction. We propose a solution to the first apparent paradox by underlining the endogeneity of income. For the second, we show that lottery winnings are also associated with more smoking and social drinking. General health will reflect both mental health and the effect of these behaviours and so may not improve following a positive income shock. Copyright

This paper proposes an axiomatic foundation for new measures of polarization that can be applied to ordinal distributions such as self-assessed health (SAH) data. This is an improvement over the existing measures of polarization that can be used only for cardinal variables. The new measures of polarization avoid one difficulty that the related measures for evaluating health inequalities face. Indeed, inequality measures are mean based, and since only cardinal variables have a mean, SAH has to be cardinalized to compute a mean, which can then be used to calculate an inequality measure. In contrast, the new polarization measures are median based and hence do not require to impose cardinal scaling on the categories. After deriving the properties of these new polarization measures, we provide an empirical illustration using data from the British Household Panel Survey that demonstrates that SAH polarization is also a relevant question on empirical grounds, and that the polarization measures are adequate to evaluate polarization phenomena whereas inequality measures are not adequate in these cases.

SUMMARY We use British panel data to determine the exogenous impact of income on a number of individual health outcomes: general health status, mental health, physical health problems, and health behaviours (drinking and smoking). Lottery winnings allow us to make causal statements regarding the effect of income on health, as the amount won by winners is largely exogenous. Positive income shocks have no significant effect on self-assessed overall health, but a significant positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known gradient in health status in cross-sectional data, and second, general health should partly reflect mental health, so that we may expect both variables to move in the same direction. We propose a solution to the first apparent paradox by underlining the endogeneity of income. For the second, we show that lottery winnings are also associated with more smoking and social drinking. General health will reflect both mental health and the effect of these behaviours and so may not improve following a positive income shock.