It is often argued that inequality is bad for your health. Indeed, in Imagining Australia, my coauthors and I made precisely this argument, saying that one of the reasons that policymakers should be worried about inequality is because it makes you sicker.
In theory, there are several ways this might happen. If each additional dollar does less for your health, then moving a dollar from a rich person to a poor person might boost average mortality. If inequality boosts crime, then this might also drive up mortality. Or it could just be that watching the rich get richer drives you to depression.
Unfortunately*,Â the empirical evidence is less persuasive than the theoretical evidence. In the most recent contribution to the literature, Harvard’s Christopher JencksÂ and I use data on mortality and top income shares (a proxy for inequality). In our preferred specification, we find precisely no relationship.
It’s important to point out that not only are our coefficients close to zero, but our standard errors are small enough that we can reject even modest detrimental impacts of inequality on health. As one participant at the NBER meetings I attended recently put it, “it’s not just zero, it’s very zero”.
If I were coauthoring Imagining Australia today, I’d omit the claim that inequality makes you sick. Of course, this doesn’t mean we shouldn’t care about inequality. Probably the best reason to worry about inequality is also the simplest:Â a dollar brings more happiness to a poor person than a rich person.
Our paper is entitled Inequality and Mortality: Long-Run Evidence from a Panel of Countries. It’ll be out soon in the Journal of Health Economics.
* Andrew Norton has pointed out to me that this was a rather unfortunate use of “unfortunately”. Of course, I meant it’s unfortunate that the theory doesn’t survive, rather than unfortunate that people aren’t being killed by inequality.