What about the relationship between poverty and health status ?
The causal relation between income and health has been a major research field in the last two hundred years. In medical and sociological literature, the existing association between state of health and poverty is now broadly recognized. More precisely, a plenty of empirical results support the assertion that the condition of economic deprivation is linked with poor health (Stronks et al. 1997 ; Fox 1989 ; Phipps 2003 ; Shawn et al. 1999). However, there are a few still open questions about the strength and the direction of the relation. Is poverty that cause poor health, or is it the contrary ? The strength of the relationship is constant along the level of deprivation, or not ? The fact that some recent analysis shows unexpected evidence (Wilkinson e Pickett 2005), means that how income inequalities affect state of health, is still open to dispute.
The paper under presentation is a contribution in this relevant debate. It shows new outcomes about the relations between the two dimensions under study, using data from the Italian sample of the European Community Household Panel (ECHP). This is a survey of Europeans carried out from 1994 to 2001, wich is representative at the individual level. For the study of the impact of one aspect on the other, a counterfactual approach has been adopted. This particular method mimic an experimental situations using observational data. The general idea is to build a “treatment group” that has to be as similar as possible to a “control group”, apart from one single characteristic : the one supposed to be the cause of a specific outcome, namely the “treatment” . This allows to detect if, given the same starting point (the individual socio-demographic profile) the outcome in one group is different from the other. If it is so, the characteristic set as the treatment could reasonably be held as the cause of that result.
The impact of a decrease in wage on health status
In the aim of measuring the effect of poverty on poor health, a comparison has to be made between individuals that have never been poor (the “control group”) with people that have experienced a decline in income for at least a certain period (the “treated”). The outcome under analysis is the occurrence of a worsening of health, or the absence of recovery, caused by the decrement of wage.
The evidences obtained by a propensity score matching estimator, point out that the average state of health differ between the two groups of individuals. That is to say, the risk of poor health is higher for less wealthy people. This evidences a causal connection between affluence and health. All conditions being equal (age, gender, educational qualification, wage, family composition and starting state of health), who goes beyond the poverty threshold communicate more frequently a worsening of health. However, the impact of a decrease in wage seams to strikes more males and individuals with a medium-high income than others. The first aspect could be explained with reference to the fact that, in Italy, the risk of becoming poor is often related to the loss of a job witch can have a negative impact on individuals self-esteem. Because of the presence in the labour market is more common between men than women, the firsts could experience this sort of identity crisis more frequently. The second aspect could be interpreted relying on the concept of relative deprivation. The idea is that falling in poverty starting from a condition of affluence could have greater consequences that becoming poor from a already low income. Figuratively speaking : the probability of get hurts is more when a man falls from a significant height.
The impact of poor health on income
The paper use the same framework shown before to test the presence of an impact of poor health on economic wealth. In this case, however, the treatment variable is the experience of a worsening of health for at least a certain period, and the outcome changes in income. As before, the analysis point out that the average wage differ between the treated and the control group. Going deeper into the explanation, the results suggest that there is no substantial change in general economic condition at a short time distance from a episode of poor health. However, this eventuality can impair working ability, ending to erode individuals working wage. This, once again, seams to happen more between men, due to their greater participation into the labour market.
In spite of the limitation of the extent of the analysis carried out, mainly caused by a small number of cases and time-periods examined, it can be concluded that there is a bidirectional relationship between health and income. Not only a decrease in wage raise the probability of a perceiving decline in health, but also becoming sick goes with a reduction of wealth, caused by contraction of working wage.