Individual vulnerability and the nurturing state: The case of self-reported health and relative income

This paper develops a method to model the effect of income on self-reported health at the individual level. The model is estimated using the meta-analytic data of 68 studies from 13 countries, and is used to test two hypotheses. The first hypothesis is that income affects health at the individual level. If this is the case, the incidence of poor health will differ across people from different income groups. The second hypothesis is that income differentials are associated with differential vulnerability to poor health. If so, the influence of income on health outcomes will differ across members of different income groups in different countries. The collected data are best described by a log-linear relationship between income and self-reported health. The empirical results confirm both hypotheses. We have found that (a) income inequality affects health at the individual level; (b) the level of self-reported poor health in the bottom deciles of the income distribution increases with the level of inequality in the country's income distribution; and (c) the relative income hypothesis has a stronger explanatory power for our results than the absolute income hypothesis. These results confirm the idea that for comparisons at the individual level, relative income matters more than absolute income. These findings have important policy implications.