Health Production /Demand for Health CareOutlineHealth Production Continued Income Inequality -- TheorySlide 4Slide 5Slide 6Slide 7Health Production Continued Income Inequality -- EvidenceSlide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Health Production Continued Inequality (Rank)Health Production Continued Inequality (landholdings)Health Production Continued Inequality (Political)Slide 20Slide 21Demand for Health ServicesSlide 23Demand for Health Services Fuzzy (Thick) Demand CurveSlide 25Demand for Health Services Fuzzy Demand CurveDemand for Health Services Effect of Price of health careDemand for Health Care Empirical EstimatesDemand for Health Services Effect of IncomeDemand for Health Services Effect of Health InsuranceDemand for Health Services Health Insurance: CoinsuranceSlide 32Demand for Health Services Health Insurance: IndemnityDemand for Health Services Health Insurance: DeductibleDemand for Health Services Health Insurance: Deductible Cont.Demand for Health Services EducationDemand for Health Services Age, Health Status, Sex, QualityDemand for Health Services Prices of Substitutes and ComplementsDemand for Health Services Travel Time CostsHealth Production /Demand for Health CareOutlineLink between Income Inequality and HealthDemand for Health CarePrice Elasticity of Demand for Health CareIncomeHealth InsuranceEtc.Health Production ContinuedIncome Inequality -- TheoryWhy is income inequality associated with health? (mechanisms – theory)Evolutionary history predisposes us toward fairness, and sickens us when we live in unequal environments.Relative deprivation a cause of ill healthRelative Income HypothesisHealth Production ContinuedIncome Inequality -- Theory1. Evolutionary history predisposes us toward fairness, and sickens us when we live in unequal environments.Came from a society were the most egalitarian tended to do better (hunters and gathers).Food could not be kept and could be hard to get so needed to shareHave only moved away from that sort of society for a relatively short time period (10,000 – 20,000 years).Health Production ContinuedIncome Inequality -- Theory2. Relative deprivation a cause of ill health.Psychosocial stress is the main pathway through which inequality affects health.Those societies that are more equal, have the precondition for the existence of stress-reducing networks of friendships.Those societies that are unequal run under more stressful strategies such as dominance, conflict and submission.Health Production ContinuedIncome Inequality -- Theory3. Relative Income Hypothesis: Relative income determines access to material goods or rank not absolute amount of money mattersLots of people with less money than someone living in downtown NY but they live in a much better house.It is relatively poor people live in worse neighborhoods for pollution. Even if the town is expensive and they have to pay a lot for their property.Health Production ContinuedIncome Inequality -- TheoryRank at work is important for determining control others have over our lives.If health is lower for those whose income is relatively low, then higher inequality makes the poor even poorer in relative terms.Health Production ContinuedIncome Inequality -- EvidenceStudies have taken many forms.Across countries analysis. (i.e comparing countries)A big problem is data comparability (income inequality measure) even in developed countriesWithin countries but across statesMaybe be less variations in inequality within a country so harder to find effects (US an exception)This is aggregate data by state so is hiding variation in income at the individual level.Health Production ContinuedIncome Inequality -- EvidenceIndividual DataVariation in income levels, but need to be able to follow the same group of people over time. Not many studies with long panel data sets.Mortalitylong time series need large sample sizes since a rare eventHealth Production ContinuedIncome Inequality -- EvidenceEmpirical Evidence:Cross-Country Comparisons:Wilkinsons (1992,1994,1996) over timeFrance and Greece narrowed income distributions by reducing relative poverty, increased life expectanciesIreland and England income inequality widened, life expectancy decreasedWhen countries are poor absolute income matters For wealthier countries chronic diseases become more important, it is social disadvantage (such as through income inequality) that affects health.He believes social disadvantage promotes stress which leads to chronic illness.Health Production ContinuedIncome Inequality -- EvidenceEmpirical Evidence Cross-Country Cont.Most convincing study Judge et al. (1997)Examined life expectancy and infant mortality for high income countries.Best data available.Find a positive relation between income inequality and infant mortality – but mainly driven by the US.Other things may be going on in US i.e. race relations.Overall, is mixed evidence from cross-country analysis, may be due to data problems.Health Production ContinuedIncome Inequality -- EvidenceEmpirical Evidence Within-CountryFigure 6 from Deaton 2003 shows strong relationship between income inequality and mortality in US.Some studies say that in 1990, the lose of life from income inequality “is comparable to the combined loss of life from lung cancer, diabetes, motor vehicle crashes, HIV infection, suicide, and homicide in 1995” (Kawachi et al. 1997)Health Production ContinuedIncome Inequality -- EvidenceEmpirical Evidence Within-Country Cont.Controlling for race breaks relationship Inequality looks like more of a race effect Hard to disentangle these.In areas with a larger % of blacks the death rates for whites and blacks is higherCould be due to poor quality health care. Is this something to do with how health care is funded?Health Production ContinuedIncome Inequality -- EvidenceNo relationship found in Canada or Australia (where race not an issue)But there may not be enough variation in income inequalityNo study on income inequality and health in UK, would be interesting as they have more income inequality.No clear conclusion that income inequality is a major problemthere are other factors that are associated with income inequality that could be driving things. Omitted variable bias.Health Production ContinuedIncome Inequality -- EvidenceEmpirical