Health-income inequality: the effects of the Icelandic economic collapse

INTRODUCTION Health-income inequality has been the focus of many studies. The relationship between economic conditions and health has also been widely studied. However, not much is known about how changes in aggregate economic conditions relate to health-income inequality. Nevertheless, such knowledge would have both scientific and practical value as substantial public expenditures are used to decrease such inequalities and opportunities to do so may differ over the business cycle. For this reason we examine the effect of the Icelandic economic collapse in 2008 on health-income inequality. METHODS The data used come from a health and lifestyle survey carried out by the Public Health Institute of Iceland in 2007 and 2009. A stratified random sample of 9,807 individuals 18-79 years old received questionnaires and a total of 42.1% answered in both years. As measures of health-income inequality, health-income concentration indices are calculated and decomposed into individual-level determinants. Self-assessed health is used as the health measure in the analyses, but three different measures of income are used: individual income, household income, and equivalized household income. RESULTS In both years there is evidence of health-income inequality favoring the better off. However, changes are apparent between years. For males health-income inequality increases after the crisis while it remains fairly stable for females or slightly decreases. The decomposition analyses show that income itself and disability constitute the most substantial determinants of inequality. The largest increases in contributions between years for males come from being a student, having low education and being obese, as well as age and income but those changes are sensitive to the income measure used. CONCLUSIONS Changes in health and income over the business cycle can differ across socioeconomic strata, resulting in cyclicality of income-related health distributions. As substantial fiscal expenditures go to limiting the relationship between income and health, the business-cycle effect on equality, which has up until now not received much attention, needs to be considered.