Health Selection vs. Causation in the Income Gradient: What Can We Learn from Graphical Trends?

Income produces health, and sickness negatively affects earnings. These two factors likely explain the income gradient in health, but each has very different policy implications. In this paper, I examine graphical trends in mortality risk between low-income and higher-income people by age and gender. These trends suggest that forward causality (income affecting health) is more important than reverse causality (health affecting income) in the income-health gradient. However, there is some evidence to suggest that reverse causality plays an important role for younger men.