How Income Influences Health: Decomposition Based on Absolute Income and Relative Income Effects

Previous research has confirmed a positive association between income and health, but there are still a lot of inconsistencies on how income affects health. Indeed, this impact is caused by overlaying of absolute income and relative income effects, and only by decomposing and comparing their relative importance within an integrated framework can suggestions be made for health inequalities and health intervention. To deal with this issue, using the panel data from the 2011, 2014, and 2017 waves of the Chinese Longitudinal Healthy Longevity Survey (CLHLS), a well-designed research model is established to decompose and explore the impact. Our results indicate that relative income, rather than absolute income, has a significant negative impact on health performance, and that these associations may be causal in nature. The health inequity persists throughout the life cycle, but it remains relatively stable, without significant expansion or convergence. To some extent, the research-proposed models enrich the related literature on associations between income and health, and the empirical results suggest that as China moves to the stage of higher incomes and accelerated aging, the Chinese government should pay more attention to income inequality and be alert to the risks of "income-healthy poverty" traps.

How Much Money Is Enough? Poverty and Health in Older People

OBJECTIVES

We examined the relationship between absolute income, adequacy of disposable income, and self-rated health among participants aged 60 years and over.

DESIGN

Cross sectional study.

SETTING

Community living older people in Hong Kong.

PARTICIPANTS

Older people aged 60 years and over in five districts in Hong Kong.

MEASUREMENTS

Data from a cross sectional survey of age friendly characteristics across five districts of Hong Kong carried out using stratified random sampling across a broad range of socioeconomic attributes.

RESULTS

Self-rated health showed a gradient for both absolute and adequacy of disposable income. The OR for the association between having just enough, or insufficient disposable income and poor health was higher: 2.0 and 3.6 respectively, and higher than that for absolute income (OR 1.8), and remained significant after adjustment for absolute income. No association between absolute income and self-rated health was observed among women. These findings suggest that adequacy of disposable income provide a stronger association with self-rated health compared with absolute income among older people aged 60 years and over, particularly for women. The absolute income corresponding to what is considered adequate disposable income lies between HK$4000-10000.

CONCLUSION

Adequacy of disposable income may be a better indicator than absolute income for older people in examining the relationship with health outcomes, particularly for older women.

Absolute Income, Income Inequality and the Subjective Well-Being of Migrant Workers in China: Toward an Understanding of the Relationship and Its Psychological Mechanisms

No study has been conducted linking Chinese migrants’ subjective well-being (SWB) with urban inequality. This paper presents the effects of income and inequality on their SWB using a total of 128,000 answers to a survey question about “happiness”. We find evidence for a satiation point above which higher income is no longer associated with greater well-being. Income inequality is detrimental to well-being. Migrants report lower SWB levels where income inequality is higher, even after controlling for personal income, a large set of individual characteristics, and province dummies. We also find striking differences across socio-economic and geographic groups. The positive effect of income is more pronounced for rural and western migrants, and is shown to be significantly correlated with the poor’s SWB but not for the well-being of more affluent respondents. Interestingly, high-income earners are more hurt by income inequality than low-income respondents. Moreover, compared with migrants in other regions, those in less developed Western China are found to be more averse to income inequality. Our results are quite robust to different specifications. We provide novel explanations for these findings by delving into psychological channels, including egalitarian preferences, social comparison concerns, expectations, perceived fairness concerns and perceived social mobility.