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The Income–Health Conundrum: Something Old, Something New
December 07, 2016

The Income–Health Conundrum: Something Old, Something New

It seems intuitive that people with higher incomes enjoy better health. But for researchers, this general relationship raises many questions, not the least of which relates to “causality.â€
What Does This Mean for Health Policy? The implications for health policy of the income–health relationship, as observed at the individual level, have been debated since the general nature of that relationship became widely accepted. The key empirical point is that the relationship “flattens” at higher levels of income, but never goes away entirely. This means that if a specified amount of income could be “transferred” from people at higher income levels to those at lower-income levels, there would be some health loss at higher levels, but a greater health gain for people at lower-income levels.10 Presumably the average health of the population would increase. This may be a more efficient way to improve health in low-income populations than programs directed at improving access to medical services. Deaton chimes in on this point, suggesting that “a policy of income provision to the poor may well be more effective than spending the same amount of public funds on a weak health care delivery system.”3 (page 28)

In practice, it is typical for policies in this area to be less direct with respect to income redistribution. For example, the Affordable Care Act (ACA) eventually would redistribute income by providing income-based subsidies for the purchase of health insurance by lower income Americans. Having health insurance will presumably lead to better access to health services and ultimately better health. However, among other things, this idea assumes that people who enroll in ACA insurance plans with high deductibles will increase the use of the medical care services that improve health, as it is typically measured. 
Even if public policy focuses on direct income transfers as an important means to improve the health of the poor, execution can be an issue. Again, Ben Franklin has an appropriate pithy saying: “Well done is better than well said.” That is, it would depend on how the transfer was accomplished and, in particular, how much income actually reached lower-income individuals, after accounting for program costs, administration, and design.
Research by Larrimore9 addresses this question, as the title of his article implies: “Does a Higher Income Have Positive Health Effects? Using the Earned Income Tax Credit to Explore the Income–Health Gradient.” Using a “natural experiment” regarding variations in the generosity of Earned Income Tax Credits, he states, “I found only limited support for the theory that the relationship between income and morbidity is derived from shifts in income.” But he notes that he examined only short-term effects.
This brings us back to Deaton, who would probably agree with Benjamin Franklin. In Deaton’s book The Great Escape: Health, Wealth and the Origins of Inequality, he cautions that the institutions through which foreign aid flows to lower-income countries tend to enrich high-income people in those countries, with the aid often not reaching its intended beneficiaries.11,12 While this is a very different context, the warning seems clear enough: just because there is intent to make income transfers that have beneficial health effects for low-income populations does not mean that this outcome actually occurs.
So, the real world is messy, as we all know, and research in the real world does not always yield definitive answers to important questions. Nevertheless, looking forward, we will likely see more attention devoted to the consequences of income inequality in America and the world. And there will likely be increased demand for information that helps us to understand the possible consequences of different policies to address income disparities. As researchers continue to clarify the income–health relationship, health impacts hopefully will play a larger role in that discussion. Woolf and colleagues aptly point out that: “As our country debates about the best policies to help the middle class and the poor, it is important to remember that economic and social policies are health policies, in that they affect life expectancy, disease rates, and health care costs for all Americans.”7

  1. Sanger-Katz, M. (2015). Income Inequality: It's Also Bad for Your Health, The New York Times. Retrieved from
  2. Appelbaum, B. (2015, Oct 12). Nobel in Economics Given to Angus Deaton for Studies of Consumption, The New York Times. Retrieved from
  3. Deaton, A. (2002). Policy Implications of the Gradient of Health and Wealth. Health Aff (Millwood), 21. Retrieved from website:
  4. The Economist. (2014). Barack Obama's state-of-the-union speech: Deal or no deal? American politics may be becoming a bit less dysfunctional. The Economist.
  5. Evans, W., Wolfe, B., & Adler, N. The Income-Health Gradient. Retrieved from
  6. Subramanian, S. V., & Kawachi, I. (2004). Income inequality and health: what have we learned so far? [Meta-Analysis]. Epidemiol Rev, 26, 78-91. doi: 10.1093/epirev/mxh003
  7. Woolf, S. H., Aron, L., Dubay, L., Simon, S. M., Zimmerman, E., & Luk, K. X. (2015). How are Income and Wealth Linked to Health and Longevity? Income and Health Initiative: Brief One. Retrieved from website:
  8. Braveman, P., Egerter, S., & Williams, D. R. (2011). The social determinants of health: coming of age. [Review]. Annu Rev Public Health, 32, 381-398. doi: 10.1146/annurev-publhealth-031210-101218
  9. Larrimore, J. (2011). Does a Higher Income Have Positive Health Effects? Using the Earned Income Tax Credit to Explore the Income-Health Gradient. The Milbank Quarterly. Retrieved from website:
  10. Marmot, M. (2002). The influence of income on health: views of an epidemiologist. [Research Support, Non-U.S. Gov't Review]. Health Aff (Millwood), 21(2), 31-46.
  11. Reinhardt, U. E. (2013). Wealth, Health and Inequality, The New York Times. Retrieved from
  12. The Economist. (2013, Oct 12). Economic Inequality: In sickness and in health. The Economist.

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