Income and Health Satisfaction: Evidence from Rural Pakistan

Khadija Shams ()

Journal of Happiness Studies, 2015, vol. 16, issue 6, 1455-1474

Abstract: This paper addresses key aspects of health inequality. We analyse in particular to what extent income determines household-specific health outcomes in rural Pakistan using our survey data. Controlling for various socio-economic characteristics, we investigate validity of the three income-health hypotheses: the Absolute Income Hypothesis, the Relative Income Hypothesis and the Income Inequality Hypothesis (IIH). Whilst these hypotheses crucially differ in their exact substance, broadly speaking, those refer to the idea that a household’s health status might be linked to the existing socio-economic environment. Households with a more favourable income position (either in absolute, relative or distributional terms) might enjoy a better health status. We employ a general empirical specification that nests different health functions as special cases. This permits testing the income-health hypotheses separately and jointly. We find that in rural Pakistan both the relative income (with respect to the relevant community) and absolute income are major determinants of health. This is in contrast to results typically reported for developed countries, where in particular the household’s absolute income position appears to matter. The study provides important insights into the causes of health inequalities. For instance, higher income improves health directly because of higher social support and other psychosocial reasons. However, we failed to confirm IIH on pure statistical grounds. Copyright Springer Science+Business Media Dordrecht 2015

Keywords: Health measurement; Health inequality; Health services; Socio-economic indicators; Rural Pakistan (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s10902-014-9568-6

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