Monday, November 16, 2009

[EQ] An Economic Framework for Analysing the Social Determinants of Health and Health Inequalities

An Economic Framework for Analysing the Social Determinants of Health and Health Inequalities

David Epstein 1,2 ; Dolores JimĂ©nez-Rubio 2 ; Peter C Smith 1; Marc Suhrcke3

1University of York, UK

2University of Granada, Spain

3University of East Anglia, UK

CHE Research Paper series - Centre for Health Economics

University of York October 2009

Available online PDF [68p.] at:


"……Reducing health inequalities is an important part of health policy in most countries. This paper discusses from an economic perspective how government policy can influence health inequalities, particularly focusing on the outcome of performance targets in England, and the role of sectors of the economy outside the health service – the 'social determinants' of health - in delivering these targets.


Theoretical models

There has been some theoretical work in economics on the interaction between income, personal behaviour, and health. The core of these models is an assumption that individuals pursue a number of objectives, not all related to longevity and health. Within these models, health is valued for its own sake, and also promotes pursuit of other objectives: work, raising family, and participating in the community. Personal choices may therefore be made perfectly rationally to maximize these objectives, but may not necessarily maximize health.


Furthermore, these models offer no unambiguous predictions about the relationship between the social gradient and health behaviour or health. However, if income has an increasing influence on health as income increases, for example due to positive lifestyle changes, then under reasonable assumptions it is likely that redistribution of income towards disadvantaged people might reduce Income Related Health Inequality (IRHI), but at the expense of average population health. Overall proportionate income growth would increase average health but increase IRHI….."



"…….Types of government interventions

Policies to influence individual behaviour include four categories of intervention (from Sassi and Hurst).

·          Increasing healthy options, where the market fails to provide (eg improving school meals, improving public transport);

·          Influencing preferences: this might include providing information, such as improved food labelling, personalized health-related advice, and social marketing approaches;  incentives: some experiments have been effective, such as the Conditional Cash Transfer experiments in Latin America, that offer small but meaningful cash rewards for compliance with (eg) preventive initiatives or enrolment in school. There are nevertheless numerous design issues to be considered, such as which behaviour to target, which groups (if any) to target, the size of the reward, and how to police the scheme o using more recent insights from behavioural economics, there is increased interest in 'liberal paternalism', under which peoples preferences might be influenced by the manner in which options are presented to them.

·          Price controls, subsidies and consumption taxes have a long history in public policy, for example in the form of 'sin taxes'. Recent studies (eg on mimimum pricing of alcohol) have suggested that these are generally effective in aggregate, though price rises generally have the highest impact on poor people, so the impact on inequalities is less clear cut. There may also be unintended side-effects, such as smuggling and cross-border consumption.

·          Restrictions and bans and other forms of regulated behaviour can be effective (eg the public smoking ban) but may lead to unintended adverse outcomes (such as illegal avoidance measures)…."


"….Integrating equity into priority setting

The methodology of priority setting in health care has reached an advanced stage of development, not least through the work of the National Institute for Health and Clinical Excellence (NICE). There are however challenges in integrating public health and social interventions into the traditional cost effectiveness approach. Drummond and colleagues summarize these as:

- Attributing outcomes to interventions

- Measuring and valuing outcomes

- Incorporating equity considerations

- Identifying intersectoral costs and consequences

An implication of this analysis is that priority setting is drawn towards cost-benefit rather than cost effectiveness analysis, a much more demanding methodology. Furthermore, analysis of equity requires modelling differential responses by subgroup, again multiplying complexity.

There has been some work by economists on how society values identical health gains for different population groups. There is evidence of strong preference for equity amongst some people, but preferences are highly variable. In principle, this research can be used to adjust cost-effectiveness ratios for equity concerns. However, studies so far have been relatively small scale and tentative in their conclusions.

Given the methodological challenges, policy makers (including the UK government) have developed a more pragmatic approach towards priority setting, in the form of descriptive Health Impact Assessments. These are likely to be especially helpful when examining cross-departmental initiatives…"




1. Introduction

2. Economic framework for analysing health inequalities

3. Empirical estimates of the relationship between health, human capital and income

3.1 Using micro (individual and household) level data

3.2 The relationship between population health and economic growth

3.3 The effect of income inequalities on health inequalities in the UK

3.3.1 Trends in income inequalities

3.3.2 Trends in health inequalities

3.4 Health during economic downturns

4. Initiatives to change lifestyle and consumer behaviour

4.1 Models of demand for health

4.2 Social gradient in health behaviour

4.2.1 Alcohol

4.2.2 Smoking

4.2.3 Obesity

4.3 Types of market failure for prevention

4.4 Policies to promote prevention

4.4.1 Increasing healthy options

4.4.2 Influencing preferences

4.4.3 Consumption taxes, subsidies and price controls

4.4.4 Restrictions and bans

5. Service delivery of national targets

5.1 National Targets

5.2 Weighted capitation formula

5.3 Service delivery at local level

5.3.1 NHS hospital trusts and PCTs

5.3.2 Staff contracts.

5.3.3 Pharmacy contract

5.3.4 GP contract

5.3.5 Incentives for GPs to undertake health promotion

5.4 Partnership working

5.5 Inequalities in the delivery of primary and hospital health-care

6. Evaluation and priority setting for health and health inequalities in England

6.1 A normative framework for priority setting

6.1.1 Estimating equity weights

6.1.2 Results of the Dolan study

6.1.3 Equity in priority setting

6.2 The 'societal' perspective

6.3 Incorporating multiple criteria into decision making

6.4 Health Impact Assessment

6.5 Attribution of outcomes

7. Conclusions


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