Is wealthier always healthier in poor countries? The health implications of income, inequality, poverty, and literacy in India

Standard policy prescriptions for improving public health in less developed countries (LDCs) prioritise raising average income levels over redistributive policies since it is widely accepted that ‘wealthier is healthier’. It is argued that income inequality becomes a significant predictor of public health only after the ‘epidemiological transition’. This paper tests this theory in India, where rising income levels have not been matched by improvements in public health. We use state-, district-, and individual-level data to investigate the relationship between infant and under-five mortality, and average income, poverty, income inequality, and literacy. Our analysis shows that at both state- and district-level public health is negatively associated with average income and positively associated with poverty. But, at both levels, controlling for poverty and literacy renders average income statistically insignificant. At state-level, only literacy remains a significant and negative predictor. At the less aggregated district-level, both poverty and literacy predict public health but literacy has a stronger effect than poverty. Inequality does not predict public health at state- or district-levels. At the individual-level, however, it is a strong predictor of self-reported ailment, even after we control for district average income, individual income, and individual education. Our analysis suggests that wealthier is indeed healthier in India – but only to the extent that high average incomes reflect low poverty and high literacy. Furthermore, inequality has a strong effect on self-reported health. Standard policy prescriptions, then, need revision: first, alleviating poverty may be more effective than raising average income levels; second, non-income goods like literacy may make an important contribution to public health; and third, policy should be based on a broader understanding of societal well-being and the factors that promote it.