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

The Income–Health Conundrum: Something Old, Something New

Medica Research Institute is a non-profit, research organization determined to improve health outcomes for all, especially the most vulnerable through advancing knowledge that informs value-based healthcare and accountable communities for health. We are committed to contributing to evidence through independent, data-driven health services research that is placed in the public domain.
This article was written by Jon Christianson, PhD, Medica Research Institute senior fellow and James A. Hamilton chair in health policy and management at the School of Public Health at the University of Minnesota.

Within a recent 6-month period, 2 seemingly unrelated articles in The New York Times caught my eye.
One reported on health services researchers at the University of Wisconsin studying the relationship between income disparities and health across geographic areas in the United States.1 In an earlier piece, the paper covered the award of the Nobel Prize in Economic Sciences to Angus Deaton, a faculty member at Princeton University. According to the Times, Deaton received the Nobel for work on individual consumption behavior and its implications for stimulating economic progress in underdeveloped countries.2

In other work, not noted in the Times article, Deaton has weighed in on the relationship between income and health. His Health Affairs article on the topic was one of the most interesting and intellectually provocative published during my 17 years on the journal’s editorial board.3

Deaton’s Health Affairs article benefited from, and extended, a substantial body of research on the relationship between income and health. After a brief lull, the topic has become popular again in mainstream economics and interdisciplinary health services research.

President Barack Obama’s 2014 State of the Union address4 and statements by candidates in this past election cycle have raised the profile of income disparities in the United States and their implications for a variety of important societal questions, but not specifically for health. This is understandable, as I explain below, because the income–health relationship is not easily reduced to a political soundbite despite (or because of?) the attention it has received for decades in academic and policy wonk circles.

What Do We Know—or Think We Know—About the IncomeHealth Relationship?

It seems intuitive that people with higher incomes enjoy better health. In fact, data do support an empirical relationship between income and health, although things are inevitably more complicated than they first appear. In their very accessible overview of the topic, Evans, Wolfe and Adler observe that “the existence of a positive relationship between socio-economic status and health has been well established; individuals who have been better off financially tend to have better health”5 (page 3). And, at every income level, moving up to a higher income is associated with better health, although the size of the health gain is less at higher levels of income.6

For researchers, this general relationship raises many questions, not the least of which relates to “causality.” That is, does having a higher income lead to better health, or does better health lead to a higher income? Or does causality run both ways?

There are many reasons that higher income may lead to better health. People with higher incomes typically have more comprehensive health insurance that provides them with better financial access to medical care. And they have the financial means to enjoy better nutrition, purchase health club memberships, live in safer neighborhoods, and so forth.7

On the other hand, people in poor health have more limited income opportunities than those in robust health. This relationship may manifest itself more clearly over time. For example, children in poor health may have more difficulty learning in their early years, resulting in lower incomes later in life.

What Complicates Our Understanding of the Income–Health Relationship?

There may be other factors that affect both income and health levels. That wise producer of pithy sayings, Benjamin Franklin, raised this possibility when he proclaimed, “Early to bed, early to rise makes a man healthy, wealthy, and wise.” Apparently, he felt that the timing of sleep could affect both health and incomes. Without considering this, one might erroneously conclude that higher incomes caused better health, or vice versa.

This idea suggests that it can be challenging to tease out the relationship between income and health. For example, education can affect health by influencing the degree to which people understand the relationships between their personal behaviors and health. Education also can affect income, with better-educated people securing higher-paying jobs. Education certainly seems a more plausible influence than the scheduling of sleep, but there are factors in addition to education that are also plausible.

Any attempt to understand the relationship between health and income would need to take these other factors into account, and many research studies have devoted a great deal of effort trying to do exactly that. A review of this literature concludes that “many longitudinal studies show that economic resources predict health or its proximate determinants, even after adjustment for education” and further that “several researchers have observed health effects of income/wealth even after adjusting for many other relevant factors.”8 So, empirical data and analyses support the notion that a relationship between income and health exists, in the direction expected, at the individual level. But the issue of causation remains a bit murkier.9

What About Population Health?

The work of researchers at the University of Wisconsin described in The New York Times1 picked up a different thread of the income–health discussion. It’s one that also has a lengthy history: Are income disparities by themselves associated with poorer health? Put another way, in 2 different geographic areas with the same average incomes and similar population characteristics, would you expect measures of population health status to be worse in the area with the greater income disparity?

This question has been addressed using different measures of income disparity and health status. In some studies, researchers found that health status was associated with the degree of income disparity in a geographic area, even when controlling for average income and differences in other community characteristics.

Explanations for this empirical finding are somewhat speculative. One possibility, as characterized by Deaton, is “that high levels of income inequality are associated with low levels of social support and cohesion and so sicken everyone, rich and poor alike.” At the time of the Health Affairs article, Deaton was skeptical of the empirical relationship, calling it “spurious,” and arguing that “there is no relationship between income inequality and mortality once we control for the racial composition of American states and cities. More generally, inequality almost certainly affects health, but income inequality is not the key”3.
Since then, much research has attempted to control for factors that could affect the relationship. The University of Wisconsin work is a recent example. These authors used potential life years lost as a measure of health, combined with a different approach to measuring income disparity. They found an income disparity effect even after controlling for racial composition of counties and other factors. Nevertheless, the mechanism by which income disparities in geographic areas, by themselves, affect population health status deserves more attention. Is it that greater disparity results in lower levels of “social support and cohesion” and therefore health, or is it something else?

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