Reconsidering the Income-Illness Relationship Using Distributional Regression – An Application to Germany

42 Pages Posted: 27 Sep 2017

See all articles by Alexander Silbersdorff

Alexander Silbersdorff

University of Goettingen (Gottingen)

Julia Lynch

University of Pennsylvania

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

T. Kneib

University of Goettingen (Gottingen)

Date Written: September 2017

Abstract

In this paper, we reconsider the relationship between income on health, taking a distributional perspective rather than one centered on conditional expectation. Using Structured Additive Distributional Regression, we find that the association between income on health is larger than generally estimated because aspects of the conditional health distribution that go beyond the expectation imply worse outcomes for those with lower incomes. Looking at German data from the Socio Economic Panel, we find that the risk of very bad health is roughly halved when doubling the net equivalent income from 15,000 Euro to 30,000 Euro, which is more than tenfold of the magnitude of change found when considering expected health measures. This paper therefore argues that when studying health outcomes, a distributional perspective that considers stochastic variation among observationally equivalent individuals is warranted.

JEL Classification: I14, C13, C21

Suggested Citation

Silbersdorff, Alexander and Lynch, Julia and Klasen, Stephan and Kneib, T., Reconsidering the Income-Illness Relationship Using Distributional Regression – An Application to Germany (September 2017). SOEPpaper No. 931. Available at SSRN: https://ssrn.com/abstract=3042709 or http://dx.doi.org/10.2139/ssrn.3042709

Alexander Silbersdorff (Contact Author)

University of Goettingen (Gottingen) ( email )

Wilhelmsplatz 1
Göttingen, 37073
Germany

Julia Lynch

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49-551-397303 (Phone)
+49-551-397302 (Fax)

HOME PAGE: www.vwl.wiso.uni-goettingen.de/klasen.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

T. Kneib

University of Goettingen (Gottingen)

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

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