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Health, Inequality, and Economic Development
I discuss mechanisms linking health and inequality and review evidence for effects of income inequality on aggregate and individual mortality, over time and over space. I conclude that there is no direct link. Correlations come from factors other than income inequality itself, some of which are linked to broader notions of inequality and inequity that are most likely important for health. Whether income redistribution can improve population health does not depend on the existence of a direct link between income inequality and health and remains an open question.
Health, Inequality, and Economic Development
I explore the connection between income inequality and health in both poor and rich countries. I discuss a range of mechanisms, including nonlinear income effects, credit restrictions, nutritional traps, public goods provision, and relative deprivation. I review the evidence on the effects of income inequality on the rate of decline of mortality over time, on geographical pattens of mortality, and on individual-level mortality. Much of the literature needs to be treated skeptically, if only because of the low quality of much of the data on income inequality. Although there are many puzzles that remain, I conclude that there is no direct link from income inequality to ill-health; individuals are no more likely to die if they live in more unequal places. The raw correlations that are sometimes found are likely the result of factors other than income inequality, some of which are intimately linked to broader notions of inequality and unfairness. That income inequality itself is not a health risk does not deny the importance for health of other inequalities, nor of the social environment. Whether income redistribution can improve population health does not depend on a direct effect of income inequality and remains an open question.
Engel’s What? A Response to Gan and Vernon
Gan and Vernon’s comment does not resolve the puzzle that we orig-inally posed. Their description of the puzzle is unclear, so we start by restating it. The essence of the matter is this. Imagine two households, one of which is larger than the other, for example, containing the same age and sex composition of people, but with twice as many of everyone. Imagine too that both households have the same level of per capita total house-hold expenditure so that, in the example, the household with twice as many people spends twice as much in total. If there are economies of scale, the second household is better off. While it is possible for it to maintain exactly the same expenditure pattern as the smaller household, with everyone having the same of everything, it can also rearrange its purchases to take advantage of the differential economies of scale in different goods. Because food is a normal good, we would expect the larger household to spend more per capita on food. This is especially so in poor countries, where there are few substitutes for food, so that there is limited opportunity for substituting away from food toward goods with greater economies of scale. The evidence contradicts this prediction. We looked at household survey data from the United States,