Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2009:4: Health inequality in Nordic welfare states - more inequality or the wrong measures?

Kjell Arne Brekke () and Snorre Kverndokk ()
Additional contact information
Kjell Arne Brekke: Department of Economics, University of Oslo,, Postal: Department of Economics, University of Oslo, P. O. Box 1095 Blindern, N-0317 Oslo, Norway
Snorre Kverndokk: Ragnar Frisch Centre for Economic Research, Postal: Ragnar Frisch Centre for Economic Research, Gaustadalléen 21, N-0349 Oslo, Norway

Abstract: Several empirical papers have indicated that the health inequalities in the Nordic welfare states seem to be at least as high as health inequalities in other European countries even if the Nordic states have a more egalitarian income structure. This is in contrast to standard economic theory that predicts that income equality should lead to health equality everything else equal. We argue that there may be a straightforward explanation why Nordic countries appear to have a steeper health gradient than other countries. Health and income are related, and the correlation between income and health will be weaker the more noise there is in terms of other determinants of income. If the Nordic countries have succeeded in reducing the impacts of other determinants of income, like social class, then the correlation between income and health will be stronger in the Nordic countries. This story also holds for other measures of health inequality. However, if the causality is running from income to health, there may be a reason why health inequality is higher in more egalitarian states based on cognitive stress theory. We argue however, that even in this case the difference between Nordic states and the rest of Europe may be a result of poor measures.

Keywords: Health inequality; socio-economic status; Nordic welfare states; egalitarian countries

JEL-codes: D31; I12

18 pages, May 19, 2009

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