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Friday, August 18, 2006

It's Not Even Zero

[I posted this at New Economist and it generated a few comments, so I thought I'd post it here as well. One comment said:

[T]he impressive thing is that someone who made a big deal about inequality once before and still feels obligated to argue for other policies to promote redistribution, nonetheless came up with a clear and scientifically interesting paper refuting his own ideas. A refutation that he accepts and is obviously proud of. On days like this, I feel that econ's pretensions to being scientific are a very good thing.

This is the kind of paper that sparks further work, so this is unlikely to be the last word on this topic.]

Andrew Leigh with new research on the health effects of inequality. There's no evidence that being rich reduces average mortality, or that being poor increases it:

Does Inequality Kill You?, by Andrew Leigh: 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. ... Unfortunately, the empirical evidence is less persuasive than the theoretical evidence. In the most recent contribution to the literature, Harvard’s Christopher Jencks and I ... 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 ... 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: 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.

    Posted by on Friday, August 18, 2006 at 09:25 AM in Economics, Health Care, Income Distribution | Permalink  TrackBack (0)  Comments (17)


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