News Release

For Release: September 25, 1998
Contact: Mary Daly

Income Inequality and Mortality Risk in the United States: Is There a Link?

Recent research suggests that the unequal distribution of income in the U.S. affects the health of the populace, according to results reported in the latest FRBSF Economic Letter (98-29) by Mary Daly, San Francisco Fed Economist, and Greg Duncan, Professor of Education and Social Policy at Northwestern University.

Explanations for the observed association between income and life expectancy fall into two categories: economic and psychosocial. According to the economic explanation, "...if inequality in the income distribution produces unequal access to commodities--such as education, heath care, and police protection--the negative effects on those at the bottom of the distribution will not be offset by positive outcomes for those at the top of the distribution." According to the psycho social explanation, "...it is relative income position itself that matters for life expectancy. The theory posits that levels of depression, isolation, insecurity, and anxiety, which are known correlates of mortality, are associated with relative economic position."

Using data from the National Center for Health Statistics Compressed Mortality File and the 1980 and 1990 decennial censuses, Daly and Duncan first "find a strong correlation between state-level income inequality and age-adjusted state mortality rates in both 1980 and 1990." They then perform a more strict test by examining the correlation between changes in inequality and mortality by state. Specifically, they control for "potentially unmeasured state-specific characteristics." Their results reduce "the correlation between income inequality and mortality by about one-third." Therefore, "this suggests that some portion of the inequality-mortality association captured in the cross-sectional analysis most likely is attributable to a third factor, such as industrial structure, for which inequality is a good proxy." Finally, they decompose the effect of overall inequality into inequality associated with deprivation at the bottom versus affluence at the top. These results indicate that "the strength of the association between income inequality and mortality is driven by income dispersion in the lower half of the income distribution."

In general, Daly and Duncan's results "support the economic hypothesis of the link between income inequality and mortality. The fact that mortality correlations are stronger for measures that stress the depth of poverty rather than the height of affluence suggests that actual deprivation, not relative economic position, determines the relationship," they write.

"Rapid growth in income inequality in the United States over the past two decades has prompted many to question the wisdom of allowing an unequal income distribution to persist in an industrialized nation," the authors conclude. While more research is required for a complete understanding, "the results presented here suggest that policies targeted at increasing the incomes of the poor are likely to have a larger effect on mortality risk than policies designed to reduce inequality more generally."