Income, Relative Income and Health

News Blog readers who enjoyed my analysis of Chetty’s monumental JAMA article on income and longevity at age 40 [1] may wish to read a commentary by last year’s Nobel prize winner for economics, Angus Deaton.[2] Some points:

  1. Studies correlating income with longevity over-estimate the association between wealth and age because they assume that people to whom the results are extrapolated will remain in their income groups.
  2. The association between wealth and health overestimates the causal effect of wealth on health because health also influences wealth to a degree.
  3. While the life expectancy of poor people varies widely by locality, those of rich people does not.
  4. Given the poor health of middle-aged Americans, especially white Americans from low socio-economic levels, we can expect to see health disparities of adults widen in the short-term. Health disparities in children in America are declining (see previous post).
  5. In setting policy – especially tax rates – be guided by absolute not relative income disparities. Every society has a top and bottom percentile and always will have; just like more than half of people cannot be above median.
  6. Be careful when someone tells you that health disparities are growing – often (as now) relative disparities widen as absolute disparities decline. This can happen because the same relative risk reduction has a bigger (absolute) effect when baseline rates of ill-health are high (as among poor people) than when they are low (as among the financially better-off).
  7. Education and cognitive ability are independent predictors of both health and wealth. Since parents are important educators, the regress is hard to break.

— Richard Lilford, CLAHRC WM Director

References:

  1. Chetty R, Stepner M, Abraham S, et al. The Association Between Income and Life Expectancy in the United States, 2001-2014.JAMA. 2016; 315(6):1750-66.
  2. Deaton A. On Death and Money. History, Facts, and Explanations. JAMA. 2016; 315(16): 1703-5.
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2 thoughts on “Income, Relative Income and Health”

  1. “be guided by absolute not relative income disparities. Every society has a top and bottom percentile and always will have; just like more than half of people cannot be above median”
    crystal clear and applicable to many areas of practice and research.
    When I read that 26% of children were above 95 percentile I worry

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