Determinants of Health - How Important Is Income? - Evidence from Uganda

The health status of individuals is of great importance not only because of the direct utility health can provide but because of productivity losses and large indirect costs, caused by ill-health, which places demands on already stretched health systems and family support networks. This is particularly the case in Uganda where high levels of HIV/AIDS prevalence, over the last two decades, has had a debilitating effect on many families and their ability to escape poverty. Despite this however, the loss of productive units is yet to prompt in-depth research into establishing the main socio-economic determinants of morbidity, and in particular, find out the role incomes play in determining morbidity levels of Ugandans. Lack of research in this research area is especially surprising given the Ugandan governments emphasis, over the last decade, on poverty reduction through economic reforms which primarily aim at creating an enabling environment for economic agents to exploit by using their initial endowment of capabilities. Despite the relative success in reducing poverty levels, from 56% of the population in 1992 to 39% in 2002/3, there is evidence to suggest that households far below the poverty line are more likely to experience an extended duration of poverty, and therefore chronic poverty. The lack of human/health endowment appears to have played a major role in this. This paper fills the void in understanding the main socio-economic causes of sickness for all Ugandans, and in particular, the influence wealth has on health status. It provides the most comprehensive and up to date microeconometric analysis, on this research area, by using Uganda’s nationally representative household survey of 1999/2000. By adopting a 2SLS approach to control for endogeneity issues between income and health we are able to establish the importance of income in determining heath status, and compare the reliability of self reported health with anthropometric measures.