TAILIEUCHUNG - Health and Income: a Robust Comparison of Canada and the US

This paper uses sequential stochastic dominance procedures to compare the joint distribution of health and income across space and time. It is the first application of which we are aware of methods to compare multidimensional distributions of income and health using procedures that are robust to aggregation techniques. The paper’s approach is more general than comparisons of health gradients and does not require the estimation of health equivalent incomes. We illustrate the approach by contrasting Canada and the US using comparable data. Canada dominates the US over the lower bi-dimensional welfare distribution of health and income, though not generally. | Centre Interuniversitaire sur le Risque les Politiques Économiques et I Emploi Cahier de recherche Working Paper 09-09 Health and Income a Robust Comparison of Canada and the US Jean-Yves Duclos Damien Échevin Mars March 2009 Duclos CIRPÉE and Département d économique Pavillon DeSève Université Laval Québec Canada G1V 0A6 Phone 1 418 656-7096 Fax 1 418 656-7798 jyves@ Échevin Département d économique and GRÉDI Université de Sherbrooke 2500 Bd de l Université Sherbrooke Québec Canada J1K 2R1 Phone 1 819 821-8000 ext. 61358 Fax 1 819 821-7934 Abstract This paper uses sequential stochastic dominance procedures to compare the joint distribution of health and income across space and time. It is the first application of which we are aware of methods to compare multidimensional distributions of income and health using procedures that are robust to aggregation techniques. The paper s approach is more general than comparisons of health gradients and does not require the estimation of health equivalent incomes. We illustrate the approach by contrasting Canada and the US using comparable data. Canada dominates the US over the lower bi-dimensional welfare distribution of health and income though not generally in terms of the uni-dimensional distribution of health or income. The paper also finds that welfare for both Canadians and Americans has not unambiguously improved during the last decade over the joint distribution of income and health in spite of the fact that the unidimensional distributions of income have clearly improved during that period. Keywords Health inequality self-reported health status income distribution stochastic dominance social welfare JEL Classification I10 I32 I38 D63 D30 H51 1 Introduction The recent literature on health economics has shown a keen interest in the measurement of health inequality and in its determinants. One of the more persistent and salient findings1 is the existence of a health-income .

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