The Frontal Cortex

Inequality is Healthy

That’s the conclusion of a new study by economists Andrew Leigh and Christoper Jencks. (I suppose this is good news – poor people aren’t more likely to die in developed countries – although I fear how these statistics will be interpreted by policy makers and the Wall Street Journal editorial page. Yet another reason to abolish the estate tax…) The actual paper hasn’t been released yet, but here is Leigh’s summary:

It is often argued that inequality is bad for your health. 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, the empirical evidence is less persuasive than the theoretical evidence. In the most recent contribution to the literature, Harvard’s Christopher Jencks 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”.

Of course, there is still persuasive evidence that inequality is bad for your mental health

Comments

  1. #1 Ron
    August 18, 2006

    This is really ridiculous and so cynical. As if their measure of ‘mortality’ can be taken as a proxy for meeting basic needs and quality of life. Tell people who are sunk in areas of high marginality that their children aren’t dying at three times the rate of people in the city from malnutrition and curable diseases. Sometimes I really wonder how academics and stomach themselves. This is science?

  2. #2 Jonah
    August 18, 2006

    Well, it’s dismal science…While I agree with your sentiment, I also think it’s important to understand the exact effects of inequality, so we can better target our inequality reduction programs.

  3. #3 Thomas Palm
    August 18, 2006

    The other side of this coin is that being rich doesn’t make you live longer. So then there really isn’t any reason to abolish estate tax…

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