Sunday, 26 May 2013

Is income inequality associated with life expectancy over time?

In The Spirit Level, Wilkinson and Pickett argue that "equality is better for everyone". In particular, they argue that inequality is detrimental to health. According to them, the higher the level of inequality in a country, the worse the health of that country's inhabitants. In addition to citing a large number of epidemiological papers which allegedly support their view, they plot income inequality against life expectancy for a cross-section of advanced countries, and find a weak negative relationship. Indeed, the only original contributions their book makes to the analysis of relevant data are simple bivariate charts. Given that Wilkinson and Pickett chose not to carry out any detailed analyses, why didn't they at least plot income inequality and life expectancy over time?

Here I do just that, using data from the OECD and World Bank. The first chart shows the relationship between income inequality and life expectancy in Poland since 2004 (the earliest date for which I could find data on income inequality).

Poland, interestingly, is one of the few advanced countries in which income inequality has fallen in the last decade (at least when measured by the Gini index). As the chart indicates, income inequality and life expectancy were negatively correlated over the period in question. Wilkinson and Pickett's hypothesis therefore gains support from this example. But how are the two variables related in other countries?

The charts show that, in general, both inequality and life expectancy have increased since the late 1970s. Indeed, life expectancy has increased more-or-less linearly in every country. Contra Wilkinson and Pickett then, one could infer that inequality enhances life expectancy! However, a more parsimonious interpretation--I would argue--is simply that income inequality does not per se affect life expectancy.

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