Aversion to health inequality — Pure, income-related and income-caused

ElsevierVolume 94, March 2024, 102856Journal of Health EconomicsAuthor links open overlay panel, , Abstract

We design a novel experiment to identify aversion to pure (univariate) health inequality separately from aversion to income-related and income-caused health inequality. Participants allocate resources to determine health of individuals. Identification comes from random variation in resource productivity and information on income and its causal effect. We gather data (26,286 observations) from a sample of UK adults (n = 337) and estimate pooled and participant-specific social preferences while accounting for noise. The median person has strong aversion to pure health inequality, challenging the health maximisation objective of economic evaluation. Aversion to health inequality is even stronger when it is related to income. However, the median person prioritises health of poorer individuals less than is assumed in the standard measure of income-related health inequality. On average, aversion to that inequality does not become stronger when low income is known to cause ill-health. There is substantial heterogeneity in all three types of inequality aversion.

JEL classification

C90

D30

D63

I14

Keywords

Inequality aversion

Social preferences

Health

Income

Experiment

Data availability

A data repository including experimental data and code, statistical code, preference parameter estimates, and policy evaluation code is available at: https://data.mendeley.com/datasets/9vy6f6g5k3.

© 2024 The Author(s). Published by Elsevier B.V.

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