South-Western College Publishing - Economics  
Rx for Long Life: Income Equality
Subject Relationship between income inequality and public health
Topic Income Distribution and Poverty
Key Words Income Inequality, Poverty, Income
News Story

Studies have shown a relationship between income and health—the richer you are, the healthier you are. However, recent research has shown that this is not always the case. In fact, when average income increases above some threshold, that relationship seems to disappear and a new one become apparent. As a nation becomes richer, and more unequal in income distribution, a new positive relationship between income and mortality rates can be seen.

Researchers at Harvard have joined a group who argue that the best way to improve length of life is to create a more equitable sharing of national income. By comparing mortality rates with levels of inequality across states, and controlling for other factors, the more unequal a state's income distribution is, the more likely its citizens were to die. Not only does unequal income affect social services, such as education and public health, but researchers argue that inequality affects individuals' psyches as well. "Wide income distributions create social prejudices and ideas of superiority and inferiority, [and] dominance and subordination," according to one of the researchers.

However, another group of researchers argues that what these people have found is more of a correlation than a causal relationship. In other words, some believe that there is a missing link in this relationship: Income inequality will directly impact this missing link (such as individual characteristics), which will then impact the mortality rate.

Regardless of the outcome, these individuals have given policy makers much to think about, as the issues of income inequality have become more and more apparent. Since 1970, the richest 5% in America saw their average incomes rise from $33,600 to $260,500 per yea; at the same time the average income of the poorest 20% increased from $2,000 to $10,100.

(Updated January, 2004)

Questions
1.

Draw a Lorenz Curve to illustrate what is happening to income inequality in the US. Be sure to label your axes and curves.

2. If you were trying to identify the relationship between income inequality and mortality, what "other factors" would you want to consider?
3. The US in 1999 ranked among the three richest nations, but 18th of 28 nations in terms of life expectancy, according to the Organization for Economic Cooperation and Development. Why do you think this is true?
Source Lila Guterman, "As the Rich Get Richer, Do People Get Sicker?" The Chronicle of Higher Education, 28 November 2003. http://chronicle.com/weekly/v50/i14/14a02201.htm

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