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Letting the Gini out of the bottle? Challenges facing the relative income hypothesis

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  • Ellison, George T. H.

Abstract

The relative income hypothesis interprets statistical associations between income inequality and average health status at the population level, as evidence that income inequality has a deleterious psychosocial effect on individual health. An alternative explanation is that these, population-level associations, are statistical artefacts of curvilinear, individual-level relationships between income and health. Indeed, provided the cost-benefit ratio of health-enhancing goods and services vary, the law of diminishing returns should produce curvilinear, asymptotic relationships between income and health at the individual level, which create ('artefactual') associations between income inequality and health at the population level. However, proponents of the relative income hypothesis have argued that these relationships are unlikely to be responsible for the associations observed between income inequality and average health status amongst high-income populations. In these populations, the individual-level relationships between income and health would be nearer their asymptotes, where a shallower slope should ensure that income inequality has little (if any) 'artefactual' effect on average health status. Yet this argument was based on analyses of population-level data which underestimated the slope and curvilinearity of underlying, individual-level relationships between income and health. It is therefore likely that (at least some part of) the population-level associations between income inequality and average health status (amongst low-, middle- and high-income populations) are 'artefacts' of curvilinear, individual-level relationships between income and health. Nevertheless, it is also possible that income inequality is somehow (partly or wholly) responsible for the curvilinear nature of individual-level relationships between income and health. Likewise, it is possible that income inequality alters the height, slope and/or curvilinearity of these relationships in such a way that income inequality has an independent effect on individual health. In either instance, the 'artefactual' effect of curvilinear relationships between income and health at the individual level would simply reflect the mechanism underlying the relative income hypothesis.

Suggested Citation

  • Ellison, George T. H., 2002. "Letting the Gini out of the bottle? Challenges facing the relative income hypothesis," Social Science & Medicine, Elsevier, vol. 54(4), pages 561-576, February.
    • Handle: RePEc:eee:socmed:v:54:y:2002:i:4:p:561-576
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    Citations

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    Cited by:

    1. 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, February.
    2. IVASKAITE-TAMOSIUNE Viginta & THIEMANN Andreas, 2021. "The budgetary and redistributive impact of pension taxation in the EU: A microsimulation analysis," JRC Working Papers on Taxation & Structural Reforms 2021-08, Joint Research Centre.
    3. Ram, Rati, 2006. "Further examination of the cross-country association between income inequality and population health," Social Science & Medicine, Elsevier, vol. 62(3), pages 779-791, February.
    4. Chen, Zhuo & Meltzer, David, 2008. "Beefing up with the Chans: Evidence for the effects of relative income and income inequality on health from the China Health and Nutrition Survey," Social Science & Medicine, Elsevier, vol. 66(11), pages 2206-2217, June.
    5. Ioana Pop & Erik Ingen & Wim Oorschot, 2013. "Inequality, Wealth and Health: Is Decreasing Income Inequality the Key to Create Healthier Societies?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(3), pages 1025-1043, September.
    6. Lindley & Lorgelly, 2005. "The relative income hypothesis: does it exist over time? Evidence from the BHPS," Labor and Demography 0510007, University Library of Munich, Germany.
    7. Brian Finch, 2003. "Early origins of the gradient: the relationship between socioeconomic status and infant mortality in the United States," Demography, Springer;Population Association of America (PAA), vol. 40(4), pages 675-699, November.
    8. Babones, Salvatore J., 2008. "Income inequality and population health: Correlation and causality," Social Science & Medicine, Elsevier, vol. 66(7), pages 1614-1626, April.
    9. Chen, Zhuo & Gotway Crawford, Carol A., 2012. "The role of geographic scale in testing the income inequality hypothesis as an explanation of health disparities," Social Science & Medicine, Elsevier, vol. 75(6), pages 1022-1031.
    10. Salti, Nisreen, 2010. "Relative deprivation and mortality in South Africa," Social Science & Medicine, Elsevier, vol. 70(5), pages 720-728, March.
    11. 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.
    12. Ioana van Deurzen & Wim van Oorschot & Erik van Ingen, 2014. "The Link between Inequality and Population Health in Low and Middle Income Countries: Policy Myth or Social Reality?," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-22, December.
    13. Sun, Tao & Zhang, Hongwei & Wang, Yuan & Meng, Xiangming & Wang, Chenwan, 2010. "The application of environmental Gini coefficient (EGC) in allocating wastewater discharge permit: The case study of watershed total mass control in Tianjin, China," Resources, Conservation & Recycling, Elsevier, vol. 54(9), pages 601-608.

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