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On a Tendency in Health Economics to Dwell on Income Inequality and Underestimate Social Stress

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  • Stark, Oded

    (University of Bonn)

Abstract

Social stress can cause physical and mental harm. It is therefore not surprising that public health policy makers have sought to identify and implement policies aimed at tackling this social ill. A frequently prescribed remedy is to reduce social stress by reducing income inequality, which is typically measured by the Gini coefficient. Decomposing the coefficient into a measure of a population's social stress and a population's income makes it possible to show that steps taken to lower the coefficient can actually exacerbate social stress. We formulate conditions under which lowering the Gini coefficient coincides with increasing social stress. If the aim of public policy is to improve public health and increase social welfare, and if social welfare is reduced by social stress, then lowering the Gini coefficient may not be the right course of action.

Suggested Citation

  • Stark, Oded, 2023. "On a Tendency in Health Economics to Dwell on Income Inequality and Underestimate Social Stress," IZA Discussion Papers 16130, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16130
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    References listed on IDEAS

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    1. Oded Stark, 2020. "Relative deprivation as a cause of risky behaviors," The Journal of Mathematical Sociology, Taylor & Francis Journals, vol. 44(3), pages 138-146, July.
    2. C. Simon Fan & Oded Stark, 2007. "A Social Proximity Explanation of the Reluctance to Assimilate," Kyklos, Wiley Blackwell, vol. 60(1), pages 55-63, February.
    3. Mary C. Daly & Daniel J. Wilson & Norman J. Johnson, 2013. "Relative Status and Well-Being: Evidence from U.S. Suicide Deaths," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1480-1500, December.
    4. Elgar, Frank J. & Stefaniak, Anna & Wohl, Michael J.A., 2020. "The trouble with trust: Time-series analysis of social capital, income inequality, and COVID-19 deaths in 84 countries," Social Science & Medicine, Elsevier, vol. 263(C).
    5. Ana I. Balsa & Michael T. French & Tracy L. Regan, 2014. "Relative Deprivation and Risky Behaviors," Journal of Human Resources, University of Wisconsin Press, vol. 49(2), pages 446-471.
    6. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    7. Stark, Oded & Bielawski, Jakub & Falniowski, Fryderyk, 2017. "A class of proximity-sensitive measures of relative deprivation," Economics Letters, Elsevier, vol. 160(C), pages 105-110.
    8. Christine Eibner & William N. Evans, 2005. "Relative Deprivation, Poor Health Habits, and Mortality," Journal of Human Resources, University of Wisconsin Press, vol. 40(3).
    9. Jones, Andrew M. & Wildman, John, 2008. "Health, income and relative deprivation: Evidence from the BHPS," Journal of Health Economics, Elsevier, vol. 27(2), pages 308-324, March.
    10. Shadi Beshai & Sanju Mishra & Sandeep Mishra & R Nicholas Carleton, 2017. "Personal relative deprivation associated with functional disorders via stress: An examination of fibromyalgia and gastrointestinal symptoms," PLOS ONE, Public Library of Science, vol. 12(12), pages 1-14, December.
    11. Stark, Oded & Fan, C. Simon, 2006. "A Reluctance to Assimilate," Discussion Papers 7125, University of Bonn, Center for Development Research (ZEF).
    12. John Wildman, 2021. "COVID-19 and income inequality in OECD countries," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(3), pages 455-462, April.
    13. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
    14. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    15. Lynch, J.W. & Kaplan, G.A. & Pamuk, E.R. & Cohen, R.D. & Heck, K.E. & Balfour, J.L. & Yen, I.H., 1998. "Income inequality and mortality in metropolitan areas of the United States," American Journal of Public Health, American Public Health Association, vol. 88(7), pages 1074-1080.
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    Cited by:

    1. Stark, Oded, 2024. "A Note on Sen's Representation of the Gini Coefficient: Revision and Repercussions," IZA Discussion Papers 16856, Institute of Labor Economics (IZA).
    2. Stark, Oded, 2024. "The modification of social space as a tool for lowering social stress," Economics & Human Biology, Elsevier, vol. 53(C).

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    More about this item

    Keywords

    social stress; Gini coefficient; income inequality; public health policy; social welfare;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy

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