Working Papers, Department of Economics, Lund University
Do Socioeconomic Factors Really Explain Income-Related Inequalities in Health? Applying a Twin Design to Standard Decomposition Analysis
(), Petter Lundborg
(), Carl Hampus Lyttkens
() and Paul Nystedt
Abstract: The concentration index and decomposition analysis are
commonly used in economics to measure and explain socioeconomic
inequalities in health. Such analysis builds on the strong assumption that
a health production function can be estimated without substantial bias
implying that health is caused by socioeconomic outcomes, which is hard to
prove. This article contributes to the decomposition literature by applying
a twin design to standard decomposition analysis of socioeconomic health
inequalities in Sweden. The twin-based decomposition estimates, which
control for unobserved endowments at the twin-pair level, are much lower in
magnitude than estimates obtained via typical OLS on the same sample. This
demonstrates that OLS-based decompositions are severely upward biased due
to underlying confounders, exaggerating the contribution of income and
education to health inequality, which in turn limits the usefulness of such
decompositions for policy purposes.
Keywords: Causality; Health Inequality; Health; Socioeconomic; Income; Twins; (follow links to similar papers)
JEL-Codes: I10; I12; I14; (follow links to similar papers)
42 pages, August 20, 2012
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- This paper is forthcoming as:
Gerdtham, Ulf-G, Petter Lundborg, Carl Hampus Lyttkens and Paul Nystedt, 'Do Socioeconomic Factors Really Explain Income-Related Inequalities in Health? Applying a Twin Design to Standard Decomposition Analysis', Scandinavian Journal of Economics.
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