Income, relative income, and self‐reported health in Britain 1979–2000

Abstract

We test the relative income hypothesis that 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. Results are insensitive to the measure of self-assessed health used but the sign and significance of the effect of relative income depend on the reference group (national or regional) and the measure of relative income (Gini coefficient, absolute or proportional difference from the reference group mean, Yitzhaki absolute and proportional relative deprivation and affluence). Only one model (relative deprivation measured as income proportional to regional mean income) performs better than the model without relative income and has a positive estimated effect of absolute income on health. 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 an increase in income from the lower to the upper quartile increases the probability by 0.056. While our results provide only very weak support for the relative deprivation hypothesis, the inevitable correlation of measures of individual income and relative deprivation measured by comparing income and incomes in a reference group makes identification of the separate effects of income and relative deprivation problematic.

How does heterogeneity shape the socioeconomic gradient in health satisfaction?

“…Recent evidence has shown that relative income has no eect on self-reported health (Jones and Wildman, 2007;Sutton, 2003, 2006;Lindley and Lorgelly, 2003;Miller and Paxson, 2006). Some of the arguments in favour of no relative income eect are that relative income may have a delayed eect only after 15 years (Subramanian and Kawachi, 2004) or due to omitted variable bias caused by not including area or year eects (Gravelle and Sutton, 2006). & This is a simplication recently applied in OECD studies to adjust household income for needs.…”

Subjective Well-Being, Income and Relative Concerns in the UK

“…Finally, if 3 > 0 the comparison income has a greater e¤ect on the poor. 17 Gravelle and Sutton (2009) introduce the same measure for studying the relationship between perceived health and income in the UK. We …nd its design appropriate to our purpose as well, because we want to test for asymmetries in the impact that relative income might have on the relatively poor and the relatively rich in the comparison group.…”

Top Income Shares and Mortality: Evidence from Advanced Countries

“…Judge et al, 1998;Deaton, 2001;Gravelle et al, 2001;Deaton and Lubotsky, 2003;Gerdtham and Johannesson, 2004;Gravelle and Sutton, 2008). Most of the literature has used crosssectional data sets that do not allow controlling for unobservable heterogeneity that is associated with regions/countries and years.…”