Contrary to previous research, previous findings of huge differences in life expectancy between the rich and the poor have been contradicted by a Danish study that takes into account income-class mobility.
Research results challenge previous findings of huge differences in life expectancy between the rich and those at the bottom of the income scale. In real life people don´t necessarily stay poor or stay rich, as assumed in previous research, and three economists from the University of Copenhagen have now found a way to take this mobility between income-classes into account providing a more realistic way to calculate life expectancy for people from different walks of society. Their results show that in reality the difference between the lifespan of a rich and a poor person is really not that big.
In 2016 impressive work by a Harvard research team showed that high-income people in the US can expect to live 6.5 years longer at age 40 than low-income individuals. This research gave rise to a substantial debate about inequality in health in the US.
The existing method assumes that the poor stay poor and the rich stay rich for the rest of their lives. In reality, however, over a ten-year period half of the poorest people actually move into groups with better incomes and likewise, half of the rich leak down into lower income classes. The mortality of those who move to a different income class is significantly different from those who stay in the same class.
This mobility between income classes has until now been a challenge for the ability to calculate life expectancy across different groups in the population but Danish economists Claus Thustrup Kreiner, Torben Heien Nielsen, and Benjamin Ly Serena from Centre for Economic Behaviour and Inequality (CEBI) at the University of Copenhagen (UCPH) have now devised a method to account for this income mobility in the relationship between income and life expectancy by incorporating a classic model of social mobility from the literature.
The authors demonstrated their approach by calculating life expectancy at age 40 in Denmark based on official income and mortality records of the entire population of Danish women and men spanning the period 1983-2013, which approximately halved the difference in life expectancy between people in low and high-income groups: when accounting for income mobility, life expectancy for a 40-year-old man in the upper income groups is 77.6 years compared with 75.2 for a man in poorer groups – a difference of 2.4 years.
For women the difference between high and low-income groups is 2.2 years. However, without taking the income mobility into account the life expectancy difference was twice as big – around five years – for both men and women. Using the method, the authors suggest that the difference in the US is three years rather than 6.5.
“Our results reveal that inequality in life expectancy is significantly exaggerated when not accounting for mobility. This result is quintessential not only for our understanding of one of the most important measures of inequality in a society, namely, how long different groups can expect to live. But also by mis-measuring this type of inequality, we get to misleading conclusions about the cost and benefits of public health programs such as Medicare and social security policies. For instance, given the rich live longer, they will also benefit many more years from old-age-pension benefits,” says professor Thustrup Kreiner.
Even though inequality in life expectancy now proves to be only half as big as earlier anticipated, the new UCPH-research funded by the Danish National Research Foundation also shows, that the difference in life expectancy between the rich and the poor has steadily increased over the 30 years represented in the data. This is despite Denmark being a country that is internationally renowned for its free health care and education as well as a finely masked welfare-system that in many respects is thought to make up for differences in income.
The reason for this steady but strikingly growing difference in life expectancy is beyond the scope of this particular project, but the UCPH-economists point out that other research has demonstrated, how individuals that belong to high income/high education-groups also have proven to benefit more from new health technologies and seem to take more advantage of new types of treatment and prevention of disease.
This work proposes a method to compute the income gradient in period life expectancy that accounts for income mobility. Using income and mortality records of the Danish population over the period 1980–2013, we validate the method and provide estimates of the income gradient. The period life expectancy of individuals at a certain age, and belonging to a certain income class, is normally computed by using the mortality of older cohorts in the same income class. This approach does not take into account that a substantial fraction of the population moves away from their original income class, which leads to an upward bias in the estimation of the income gradient in life expectancy. For 40-y-olds in the bottom 5% of the income distribution, the risk of dying before age 60 is overestimated by 25%. For the top 5% income class, the risk of dying is underestimated by 20%. By incorporating a classic approach from the social mobility literature, we provide a method that predicts income mobility and future mortality simultaneously. With this method, the association between income and life expectancy is lower throughout the income distribution. Without accounting for income mobility, the estimated difference in life expectancy between persons in percentiles 20 and 80 in the income distribution is 4.6 y for males and 4.1 y for females, while it is only half as big when accounting for mobility. The estimated rise in life-expectancy inequality over time is also halved when accounting for income mobility.
Claus Thustrup Kreiner, Torben Heien Nielsen, Benjamin Ly Serena