Age-specific Income Inequality and Life Expectancy: New Evidence

Objectives -- The study has two primary goals. First, to test the hypothesis that higher levels of income inequality are related to lower levels of population health with updated data from around year 2000. Second, to examine the inequality-health relationship across the life course with particular focus on old age when income distributions often shift dramatically. Design -- Correlation techniques were used to assess the relationship between income inequality (Gini ratio) at ages 0+, 25+, 65+, 75+, and 85+ and life expectancy at corresponding ages (0, 25, 65, 75, 85) by sex, before and after adjusting for average population income. Analyses were conducted on two sets of data: 18 wealthy countries and 28 wealthy and non-wealthy countries. Data sources -- International cross-sectional data on income and life expectancy from about year 2000 were derived from the Luxembourg Income Study and the United Nations Demographic Yearbook respectively. Results -- Among wealthy countries the negative effect of income inequality on life expectancy at birth becomes insignificant after controlling for average absolute income: the correlation coefficient changes from -0.603 to -0.207 for men and -0.605 to 0.024 for women. A similar pattern is observed at age 25. By contrast, the effect becomes increasingly positive and significant across old age, notably for males, regardless of adjustments for average population income or countries of observation. Conclusions -- These updated results do not support the inequality-health hypothesis. The relationship between income inequality and life expectancy at earlier ages in wealthy countries can be explained by the confounding effect of average absolute income. In old age the data are entirely contrary to the hypothesis. More research is needed to understand the mechanisms that facilitate the increasing positive effect of income inequality on life expectancy in late life.