Income, Health and Happiness

This article utilises unit record data from the 1989–90 National Health Survey to explore the relationships between low income and perceptions of health and happiness. After describing how the key variables were constructed, attention is focused on the incidence of perceived poor health and unhappiness among those individuals living in income units on either side of a poverty threshold related to the Henderson poverty line. The results reveal that those in poverty generally have poorer health and are less happy than those above the poverty threshold. The observed differences are statistically significant for many income unit types, particularly non‐aged single people and couples with children. Attention then turns to exploring how health and happiness vary across the deciles of the income distribution. Again, significant differences are revealed, particularly when more sophisticated distributional measures are employed. Finally, consideration is given to the possibility that the results reflect reverse causality, and that the observed correlations incorporate the role of intervening variables.