Relative income, race, and mortality

This paper examines the relationship between relative income and mortality. Our research is motivated by recent literature that posits that, holding individual income fixed, those whose income are low relative to the incomes of those in a reference group will have worse health. We develop an empirical model in which an individual's health is a function of his or her own income and the incomes of those who live in the same geographical area. We show how this individual-level model can be estimated using semi-aggregated data on the mortality rates of people categorized by age, race, gender, and place of residence. The model is estimated using mortality data from the 1980 and 1990 Compressed Mortality Files, merged with income data from the 1980 and 1990 5% Public Use samples of the US Census. We find no evidence that having relatively wealthy neighbors, holding own income fixed, is associated with higher mortality. Instead, we find evidence that among some demographic and age groups-in particular working-aged black males-having relatively wealthy neighbors is associated with lower mortality. For example, among younger (aged 25-64) black men, an increase in the income of others is estimated to have a beneficial effect on mortality that is 40% as large as an equivalent increase in own income.