The Social Gradient in Health: The Effect of Absolute and Relative Income on the Individual's Health

University of Aberdeen Business School Working Paper No. 2006-06

Posted: 11 Jan 2008

See all articles by Ioannis Theodossiou

Ioannis Theodossiou

University of Aberdeen - Business School

Alexandros Zangelidis

University of Aberdeen - Business School

Date Written: February 2006

Abstract

This study investigates the effect of absolute income and relative income on health in the light of medical evidence indicating that the individual's position in the social hierarchy undermines his or her mental and physical health. It uses an instrumental variable estimation methodology that controls for the 'endogeneity' problem to statistically identify the social gradient in physical and mental health. The paper shows that individuals' own income has a positive, but modest effect on health. Absolute income appears to affect only the objective measures of health. Importantly, relative income- as a proxy for social status and position in the social hierarchy - has a significant effect on all measurements of health, with individuals higher in the social ladder enjoying better health. Finally, the results shown that individuals from families that were well-off financially (when at the age of 14) having better physical and mental health.

Keywords: Income, Social Status, Mental and Physical Health, Childhood Deprivation

JEL Classification: I00, I12

Suggested Citation

Theodossiou, Ioannis and Zangelidis, Alexandros, The Social Gradient in Health: The Effect of Absolute and Relative Income on the Individual's Health (February 2006). University of Aberdeen Business School Working Paper No. 2006-06, Available at SSRN: https://ssrn.com/abstract=1082722

Ioannis Theodossiou (Contact Author)

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Alexandros Zangelidis

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

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