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Extending decomposition analysis to account for unobserved heterogeneity and persistence in health behavior: Income-related smoking inequality among Swedish women

Journal article
Authors Gustav Kjellsson
Published in Health Economics
Volume 27
Issue 2
Pages 440-447
ISSN 1057-9230
Publication year 2018
Published at Centre for Health Economics
Department of Economics
Pages 440-447
Language en
Keywords concentration index, decomposition, health inequality, smoking, panel-data models, education, dynamics
Subject categories Health Care Service and Management, Health Policy and Services and Health Economy


This article suggests an enrichment of the standard method for decomposition of the concentration index to account for unobserved heterogeneity and persistence in health behavior. As the underlying regression model in the decomposition, this approach uses a dynamic random-effect probit that both consider individual heterogeneity, using a Mundlak type of specification, and applies a simple solution to account for smoking persistence. I illustrate the suggested approach using a panel of Swedish women in Statistics Sweden's Survey of Living Conditions for one vital health-related behavior, smoking. The results highlight the importance of persistence and show that education and living in a single household are the main drivers of income-related smoking inequality.

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