The Importance of Individual Heterogeneity in the Decomposition of Measures of Socioeconomic Inequality in Health: An Approach Based on Quantile Regression

UPF Economics and Business Working Paper No. 626

26 Pages Posted: 23 Sep 2002

See all articles by Andrew M. Jones

Andrew M. Jones

University of York - Department of Economics and Related Studies; Monash University - Centre for Health Economics

Ángel López Nicolás

Universitat Pompeu Fabra

Abstract

This paper shows how recently developed regression-based methods for the decomposition of health inequality can be extended to incorporate individual heterogeneity in the responses of health to the explanatory variables. We illustrate our method with an application to the Canadian NPHS of 1994. Our strategy for the estimation of heterogeneous responses is based on the quantile regression model. The results suggest that there is an important degree of heterogeneity in the association of health to explanatory variables which, in turn, accounts for a substantial percentage of inequality in observed health. A particularly interesting finding is that the marginal response of health to income is zero for healthy individuals but positive and significant for unhealthy individuals. The heterogeneity in the income response reduces both overall health inequality and income related health inequality.

Keywords: Health inequalities, unobserved heterogeneity, quantile regression

JEL Classification: C13, C15, D72

Suggested Citation

Jones, Andrew M. and López Nicolás, Ángel, The Importance of Individual Heterogeneity in the Decomposition of Measures of Socioeconomic Inequality in Health: An Approach Based on Quantile Regression. UPF Economics and Business Working Paper No. 626, Available at SSRN: https://ssrn.com/abstract=320903 or http://dx.doi.org/10.2139/ssrn.320903

Andrew M. Jones

University of York - Department of Economics and Related Studies ( email )

Heslington
York, YO1 5DD
United Kingdom
+44-1904-43 3766 (Phone)

Monash University - Centre for Health Economics ( email )

Building 75, 15 Innovation Walk
Monash University
Clayton, Victoria 3800
Australia

Ángel López Nicolás (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-3) 542 27 08 (Phone)
(34-3) 542 17 46 (Fax)

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