#HEJC for 26/02/2015

The next #HEJC discussion will take place Thursday 26th February, at 11pm London time on Twitter. To see what this means for your time zone visit Time.is or join the Facebook event. For more information about the Health Economics Journal Club and how to take part, click here.

The paper for discussion is a working paper published by the Canadian Centre for Health Economics (CCHE). The authors are Koffi-Ahoto Kpelitse, Rose Anne Devlin and Sisira Sarma. The title of the paper is:

The effect of income on obesity among Canadian adults

Following the meeting, a transcript of the Twitter discussion can be downloaded here.

Links to the article

Direct: http://www.canadiancentreforhealtheconomics.ca/wp-content/uploads/2014/08/Sisira-et-al.pdf

RePEc: https://ideas.repec.org/p/cch/wpaper/14c002.html

Summary of the paper

This is the first paper to examine the causal relationship between income and obesity in the Canadian context. To do so, they examined data from five biennial Canadian Community Health Survey (from 2000/01 to 2009/10), a nationally representative survey collecting information on over 100,000 individuals each survey.

Initially, the paper explored the Grossman model, which suggested increasing income would promote healthy lifestyle investments, and thus lead to a negative relationship between income and obesity. Previous studies that examined this link were discussed, some (eg. Lindahl (2005)) demonstrating a negative relationship; some (eg. Schmeiser (2009)) demonstrating a positive relationship; some (eg. Cawley (2010)) finding no evidence of a causal relationship.

Additionally, education and employment were explored. Again, the Grossman model was used as a basis, predicting i) a negative relationship between education level and obesity with a greater income effect amongst educated people and ii) a negative relationship between employment level and obesity. However, regarding education, prior studies discussed have shown “mixed results”, and regarding employment, the authors were not aware of any study to examine this causal relationship, but suggested the relationship was ambiguous.

Finally, the relationship between gender and obesity were discussed. Numerous studies have shown negative association between income and BMI amongst women, but for men, the relationship is unclear (some showing positive relationship, some negative, and some no significant relationship at all). The importance of the effect of obesity on labour market outcomes (outlining the “large” empirical literature showing obese women more likely to suffer discrimination in the labour market) was outlined.

In this study, the authors found that:

  • From 2000/01 to 2009/10, BMI and obesity rates amongst both men and women have risen.
    • For men, the obesity rate rises from 19.48% for those with income below $10k to 26.09% for those with income over $80k.
    • For women obesity falls from 26.71% for those below $10k to 17.38% for those with income over $80k.
  • For men, a 1% rise in household income leads to 0.027 point decrease in BMI (2SLS estimate); 0.084kg reduction and 0.27% point decrease in probability of being obese (linear IV procedure).
  • For women, a 1% rise in household income leads to 0.113 point decrease in BMI (much higher than for men; this used a 2SLS estimate); 0.300kg reduction; and 0.76% point decrease in probability of being obese (linear IV procedure).
  • For men the effect of income on BMI was only demonstrated at higher BMI distribution, while for women the effect of income on BMI was found throughout with a larger effect at higher BMI.
  • Education had a variable relationship amongst both men and women, not consistent with the theoretical prediction that the effect would be larger amongst educated people.
  • The effect of employment for men was mixed, with a negative effect of income on BMI only in employed men and a negative effect of income on obesity probability only in unemployed men.
  • The effect of employment for women was more consistent with theoretical predictions, showing negative effects of income on both BMI and on the probability of being obese across employment status.
  • Higher BMI and probability of obesity was associated with older age, marriage (much greater effect in women), household size (much greater effect in women) and home ownership.
  • Lower BMI and probability of obesity was associated with being widowed/separated/divorced, being an immigrant and living in urban area (in men).

In summary, this study supports the findings of Lindahl, and stands in contrast to Schmeiser, Cawley and other related studies.

Discussion points

  • Why might there be significant variation in findings between the different studies discussed?
  • Are there ways in which unemployment and neighbourhood income might directly influence BMI?
  • Is the set of control variables used in the authors’ models satisfactory?
  • Is it of concern that policies to increase household income could be regarded a pure, explicit public health policy?
  • Are there relevant studies from other countries?
  • To what extent are these findings generalisable?

Can’t join in with the Twitter discussion? Add your thoughts on the paper in the comments below.

Marginalism, reductionism, realism

There is a large literature documenting the socioeconomic gradient in health. Whether it be measured by education, income or some other metric, individuals of a lower socioeconomic status have worse health. Understanding and explaining this gradient is of great importance to improving public health; however, the way we approach investigation and application depends on our ontological and epistemological position which is often not addressed in practice but is implicit in any analysis we do.

Many have tried to explain socioeconomic gradients in health through either access to healthcare or genetics. But, gradients have widened over time within countries with little change to the genetic make-up of the population; and, there is often little difference in measured gradients between countries with universal healthcare funded through taxation (e.g. the UK) and insurance funded healthcare with known access issues (e.g. the US) (Dow and Rehkopf, 2010).

This then leads us to differences in risk factors for the main causes of death in Western nations. There does exist well documented gradients in obesity and smoking. But, gradients in exposure to risk factors often differ from gradients in mortality; for example, Southern European countries have a wider mortality gradient than Northern European countries but have a narrower obesity gradient (Mackenbach et al, 2008). Although, smoking may better explain this difference. To succinctly summarise this – it is a complex relationship.

Our aim as researchers is to obtain knowledge about this system to attempt to provide causal explanations of relationships between social and economic changes and biological outcomes. Clearly, we should have in mind that our explanations need to have a plausible biological aetiology. But, focussing here on solely the social and economic factors, we need to consider our ontological position.

The neoclassical approach posits individual, atomistic agents maximising utility by making rational choices about consumption and investment in health. This approach is exemplified by the Grossman (1972) model. Individuals ‘demand’ health on the basis of the cost of health capital and rate of depreciation. One immediate philosophical objection to this set up is the implicit dualism – the separation between the mind (the rational decision maker) and their body (their health). This dualism clearly makes little sense when mental health is considered. A more tangible objection arises since these models only consider agency and not structure. An implication of these models are that individuals’ choices about health related goods and behaviour are determined by their relative costs to the individual; there is little or no allowance for decisions to be affected by culture or society. It is ideologically individualistic.

Piero Sraffa, an influential Italian economist, developed a critique of the neoclassical approach (strictly speaking it was a ‘prelude to a critique’). One of his objections was with marginalism. He was writing about production in the economy and the problem of estimating the marginal product of a particular factor of production. He argued that the marginal product didn’t make sense since any change to the levels of any one of the factors of production would change the way it combines with any other factors of production, and the proportions they combine in. When we consider the aforementioned health ‘production functions’, we have the same issue. Merely altering income will not necessarily change health since the way in which income combines with, say, education or the local environment, will change. At the societal level, the way these interact are the result of institutions, ideology and culture.

Thus, when we estimate the effect of socioeconomic factors on health outcomes, we should, at a minimum, allow for differential effects by socioeconomic status. In interpretation and application, it may suggest that a policy of just redistributing income may not be enough – a better understanding of individual motives and heterogeneous culture is required to target policy. Many branches of economics that are considered heterodox, such as institutional economics, post-Keynesian economics and political economy analysis take account of social norms and economic institutions. But, the roles of sociology and psychology are also of great importance. This suggests the need for methodological pluralism, certainly when examining socioeconomic determinants of health, but also in general. It is perhaps best summarised by the following quote from Keynes:

The master-economist must possess a rare combination of gifts …. He must be mathematician, historian, statesman, philosopher — in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.

A comment on health inequality

A recent article by Benjamin Ho and Sita Nataraj Slavov, which I picked up via Marginal Revolution, argues that health inequality is falling. The argument is that life expectancy for the 1% dying at the bottom end of the age-at-death distribution has increased by more than the life expectancy for the 1% at the top. I’m struggling to think of much academic work being done to look at levels of health inequality in this way. However, I’m not sure what answering such questions could add.

Existing work

Plenty of work has been done on how to measure health inequality. It seems a pretty heinous crime to talk about health equality without mentioning Culyer and Wagstaff. More recently, new models of health inequality have been developed that bare varying levels of equivalence to a standard concentration curve (see herehereherehere etc). But the authors of the aforementioned article are really interested in pure health inequality, irrelevant of income or socio-economic indicators. Some work has been done here too (see here, here, here etc); indeed, the age-at-death distribution thing was done by Le Grand.

Pure health inequality

Health and income are very different in a number of ways, and it seems a misnomer to compare income inequality with health inequality. The most important difference, probably, is how society views the two. Society has some aversion to income inequality and also aversion to health inequality. However, we don’t just prefer a more equal distribution of health; we want equal full health (i.e. health maximisation). Assuming diminishing marginal returns to health care (in terms of health), we will tend to prioritise those in worse health and tend towards equality. I would argue that health can only increase indefinitely in terms of longevity. We may live longer and longer but I think ‘full health’ is a very real ceiling while we’re alive. It simply isn’t possible for a super-rich elite to develop in terms of health. What would these people be like? Bionic presumably, but that’s a different debate. Even if health could be amassed indefinitely it wouldn’t be, as health has no value in exchange.

For me (given society’s aversion to inequality, technological progress and a maximum level of health at any point in time), movement towards equal health seems inevitable. You don’t need to agree with the Grossman model to accept that health represents a kind of ‘stock’. It therefore bares more resemblance to wealth than to income. Health requires some effort to maintain, but not to the same degree as income. Ho and Slavov’s article also introduces the idea of a lottery; luck plays an important role here. Society reacts differently to an income shock (say, unemployment) than it does to a health shock (say, being hit by a car). As with income there might be fair and unfair inequalities, but either way society is going to attach more weight to reimbursing an individual’s loss of health than an individual’s loss of income (unless, maybe, the latter is a result of the former). The same applies to those dealt a nasty hand at birth. In countries where health care is dependent on ability to pay there will certainly be more of a link between health and income; and thus between health inequality and income inequality. In countries like the UK, income inequality seems less likely to affect health inequality.

Health is becoming more equal; I won’t disagree with that. But, for the reasons outlined above, this seems somewhat inevitable. I suppose that doesn’t mean we shouldn’t celebrate it, but it does raise into question the value of doing so when there are real discrepancies between different demographics’ health that need addressing.

Cynics may spot the benefit of such an approach for those at the top of the income distribution…