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Health, Income and Local Comparisons: a Study of the Relative Income Hypothesis in South Africa

Wästlund, David LU and Wallin Bernhardsson, Niklas LU (2015) NEKN01 20151
Department of Economics
Abstract
This study investigates the relationship between income and health of individuals in South Africa. In particular it tests whether the relative, rather than just the absolute, income of the individual plays a significant part in determining health outcomes. The absolute income hypothesis (AIH) is tested and, in line with previous related research, found significant, so that individuals with higher income are associated with better health. The Relative Income Hypothesis (RIH) is then tested through the added inclusion of a term for the individual’s relative income in his or her community.

The study uses Self-Assessed Health (SAH) from a nationally representative sample to determine individual health. It uses two different types of... (More)
This study investigates the relationship between income and health of individuals in South Africa. In particular it tests whether the relative, rather than just the absolute, income of the individual plays a significant part in determining health outcomes. The absolute income hypothesis (AIH) is tested and, in line with previous related research, found significant, so that individuals with higher income are associated with better health. The Relative Income Hypothesis (RIH) is then tested through the added inclusion of a term for the individual’s relative income in his or her community.

The study uses Self-Assessed Health (SAH) from a nationally representative sample to determine individual health. It uses two different types of measures for relative income, one objective based upon reported income and one subjective based upon the individual’s perception of how the own income relates to the income of others. The role of knowledge and groups for comparison available to the individual is thoroughly discussed. The Relative Income Hypothesis (RIH) is also separately tested for different income groups as well as across time, since both past and predicted future income may be influential in determining current health.

The study finds that whether relative income helps explaining individual health strongly depends on the measure used for relative income. In particular whether relative income is defined in objective or subjective terms is found to be crucial. The results based on objective income finds no support for the Relative Income Hypothesis whereas support is found when subjective income is used. This suggest the importance of psychological factors in explaining the relationship between income and health. (Less)
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author
Wästlund, David LU and Wallin Bernhardsson, Niklas LU
supervisor
organization
course
NEKN01 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
Relative Income Hypothesis, Self-Assessed Health, Absolute Income Hypothesis, South African Health
language
English
id
7792816
date added to LUP
2015-09-03 13:25:00
date last changed
2015-09-03 13:25:00
@misc{7792816,
  abstract     = {This study investigates the relationship between income and health of individuals in South Africa. In particular it tests whether the relative, rather than just the absolute, income of the individual plays a significant part in determining health outcomes. The absolute income hypothesis (AIH) is tested and, in line with previous related research, found significant, so that individuals with higher income are associated with better health. The Relative Income Hypothesis (RIH) is then tested through the added inclusion of a term for the individual’s relative income in his or her community.

The study uses Self-Assessed Health (SAH) from a nationally representative sample to determine individual health. It uses two different types of measures for relative income, one objective based upon reported income and one subjective based upon the individual’s perception of how the own income relates to the income of others. The role of knowledge and groups for comparison available to the individual is thoroughly discussed. The Relative Income Hypothesis (RIH) is also separately tested for different income groups as well as across time, since both past and predicted future income may be influential in determining current health.

The study finds that whether relative income helps explaining individual health strongly depends on the measure used for relative income. In particular whether relative income is defined in objective or subjective terms is found to be crucial. The results based on objective income finds no support for the Relative Income Hypothesis whereas support is found when subjective income is used. This suggest the importance of psychological factors in explaining the relationship between income and health.},
  author       = {Wästlund, David and Wallin Bernhardsson, Niklas},
  keyword      = {Relative Income Hypothesis,Self-Assessed Health,Absolute Income Hypothesis,South African Health},
  language     = {eng},
  note         = {Student Paper},
  title        = {Health, Income and Local Comparisons: a Study of the Relative Income Hypothesis in South Africa},
  year         = {2015},
}