Income Dynamics and Health

The author finds household income to be quite volatile for many families, even during periods of macroeconomic growth, in contrast to the assumptions of many life cycle models.

Abstract

The focus of this article is the economic dimension of socioeconomic status as it relates to health. In contrast to the assumptions of many life cycle models, the author finds household income to be quite volatile for many families, even during periods of macroeconomic growth. Income inequality has increased dramatically in the last 20 years. Studies relating various measures of health (e.g., low birth weight; cognitive development, stunting, wasting in early childhood; mortality in later adult years) to longitudinal measures of family income often find quite powerful effects of income, even after controlling for correlated aspects of socioeconomic status and baseline health status. The author discusses strategies for modeling income effects.