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Testing the relationship between income inequality and life expectancy: a simple correction for the aggregation effect when using aggregated data

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  • Thomas Mayrhofer
  • Hendrik Schmitz

Abstract

In this paper, we show a simple correction for the aggregation effect when testing the relationship between income inequality and life expectancy using aggregated data. While there is evidence for a negative correlation between income inequality and a population’s average life expectancy, it is not clear whether this is due to an aggregation effect based on a non-linear relationship between income and life expectancy or to income inequality being a health hazard in itself. The proposed correction method is general and independent of measures of income inequality, functional form assumptions of the health production function, and assumptions on the income distribution. We apply it to data from the Human Development Report and find that the relationship between income inequality and life expectancy can be explained entirely by the aggregation effect. Hence, there is no evidence that income inequality itself is a health hazard. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Thomas Mayrhofer & Hendrik Schmitz, 2014. "Testing the relationship between income inequality and life expectancy: a simple correction for the aggregation effect when using aggregated data," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 841-856, July.
    • Handle: RePEc:spr:jopoec:v:27:y:2014:i:3:p:841-856
    DOI: 10.1007/s00148-013-0483-7
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    Cited by:

    1. Md Samsul Alam & Md Shahidul Islam & Syed Jawad Hussain Shahzad & Shazia Bilal, 2021. "Rapid rise of life expectancy in Bangladesh: Does financial development matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 4918-4931, October.
    2. Martin, Lisa & Baten, Joerg, 2022. "Inequality and Life Expectancy in Africa and Asia, 1820‐2000," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 40-59.
    3. Xiaosu Ye & Lie Ma & Kunhui Ye & Jiantao Chen & Qiu Xie, 2017. "Analysis of Regional Inequality from Sectoral Structure, Spatial Policy and Economic Development: A Case Study of Chongqing, China," Sustainability, MDPI, vol. 9(4), pages 1-17, April.
    4. Md. Samsul Alam & Muhammad Shahbaz & Sudharshan Reddy Paramati, 2016. "The Role of Financial Development and Economic Misery on Life Expectancy: Evidence from Post Financial Reforms in India," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(2), pages 481-497, September.
    5. Martina Mysikova & Jiri Vecernik, 2015. "Returns to education in transition and advanced European countries: The role of an expansion of higher education," Investigaciones de Economía de la Educación volume 10, in: Marta Rahona López & Jennifer Graves (ed.), Investigaciones de Economía de la Educación 10, edition 1, volume 10, chapter 44, pages 865-886, Asociación de Economía de la Educación.
    6. Lie Ma & Dandan Li & Xiaobo Tao & Haifeng Dong & Bei He & Xiaosu Ye, 2017. "Inequality, Bi-Polarization and Mobility of Urban Infrastructure Investment in China’s Urban System," Sustainability, MDPI, vol. 9(9), pages 1-19, September.
    7. Martina Mysíková & Jiří Večerník, 2019. "Returns to Tertiary Education in Western and Eastern Europe," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(1), pages 30-48.
    8. Luo, Weixiang & Xie, Yu, 2020. "Economic growth, income inequality and life expectancy in China," Social Science & Medicine, Elsevier, vol. 256(C).
    9. repec:prg:jnlpep:v:preprint:id:686:p:1-19 is not listed on IDEAS

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    More about this item

    Keywords

    Income inequality; Life expectancy; Aggregation effect; D31; I10; O15;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I10 - Health, Education, and Welfare - - Health - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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