On the importance of the upside-down test in absolute socioeconomic health inequality comparisons

Myra Yazbeck is an assistant professor at the Department of Economics at the University of Ottawa. She previously held a position at the University of Queensland (Australia). Her research focuses on the measurement of socioeconomic health inequalities and on peer effects in health-related outcomes. She has published more than 10 papers in international refereed journals such as the Journal of Health Economics, Health Economics, Social Science & Medicine and Social Choice and Welfare. She was also a consultant to the World Health Organization and Queensland Health.

Abstract

This paper shows that it is impossible to obtain a robust rankings of absolute socioeconomic health inequality if one only imposes Bleichrodt and van Doorslaer’s (2006) principle of income-related health transfer. This means that for any comparison, some indices obeying income-related health transfer principle will always contradict the ranking produced by other indices obeying the same ethical principle. Therefore, researchers will need to impose more structure on the ethical principles of absolute socioeconomic health inequality indices if they wish to identify robust rankings of absolute socioeconomic health inequality. We show that imposing Erreygers, Clarke and Van Ourti’s (2012) uspide-down principle is a natural candidate that allows for the identification of robust orderings of absolute health inequality. We also show that if researchers wish to operate under the principle of income-related health transfers one can increase inequality aversion and impose higher order pro-poor principles of income-related health transfer sensitivity. To illustrate the empirical relevance of the proposed approach, we compare joint distributions of income and a health-related behaviour (cigarette consumption and overweightness) in the United States in 1997 and2014.