To full paper (Hebrew)

Watch Eran Politzer, an economist at the research department describe​s the main results

·     In Israel, as in other countries, the portion of the population with a disadvantaged socioeconomic status displays higher illness and mortality rates than the portion of the population whose socioeconomic status is good. It is not clear to what extent this link derives from the impact of socioeconomic status on health, as opposed to the reverse, but there are mechanisms that explain how this effect is possible.
·     In localities that are weaker in terms of the socioeconomic index, mortality rates are 11 percent higher than in stronger localities. The additional deceased people in the weaker localities lost, on average, about 33 future years of life, of which 12 years were during working ages.
·     The composition of health services for the weaker population tends to be used more on hospitalization services and less on most community health services. This composition is liable to lead to treatment that is provided too late in degenerative illnesses and to lead to lack of efficiency and to waste.
·     People with higher education (post-secondary and higher) have a 72 percent greater chance of reporting that their health status is “very good” as opposed to those with less education (secondary and below), and a 30 percent lower chance of deterioration in health status over the course of two years. Those with higher education are less exposed to health risk factors (smoking, unbalanced nutrition, stress, loneliness) and benefit from greater financial access to health services.
·     These correlations may explain why people with lower education have higher rates of absenteeism from work for health reasons compared with people with higher education, as well as unemployment and nonparticipation in the labor force for those reasons. This gap is liable to adversely impact output and productivity.
·     Children whose parents experienced periods of poverty in the past have a lower chance of benefiting from very good health today.
Low income and low education levels are correlated with a relatively inferior health status of adults and their children. An analysis published today by the Bank of Israel presents the connection between socioeconomic status and health in Israel, deals with the question of to what extent socioeconomic status impacts on health and to what extent the direction of the effect is the reverse, and attempts to assess some of the costs inherent in this connection.
The Bank of Israel analysis finds that the probability of someone with higher education (post-secondary and above) experiencing a decline in their health status over a 2–3 year period is lower, by about 30 percent, than that of someone with lower education. It also finds that the probability of employees with higher education reporting that their health status is very good is higher, by about 72 percent, than that of employees with lower educational attainment. The analysis presents evidence for mechanisms, known in the literature, through which low socioeconomic status is likely to negatively impact on health. These include greater exposure to health risk factors including: smoking, unbalanced nutrition, and stress; work in more dangerous professions, and worse access to health services. Thus, for example, the probability of higher-educated workers smoking at least one cigarette a day, or being exposed to secondhand smoke, is lower by about half than that of employees with less schooling. The probability of higher-educated workers examining the nutrition labels on food cartons, or undertaking physical activity at least once a week, is more than twice as high as the probability for employees with less schooling. These gaps in health status and in risk factors likely explain why among employees with less schooling the probability of being absent from work due to illness is greater by about 15 percent, and the duration of their absence is about 25 percent longer, than higher-educated workers (4.9 days as opposed to 3.9 days). Low education is correlated with greater probability of non-work due to illness.
The analysis indicates that in weaker localities—in the lower half of the socioeconomic index—mortality rates are 11 percent higher than in stronger localities. As can be seen in Figure 1, this link between a decline in a locality’s index of socioeconomic status (derived from the status of its inhabitants) and an increase in mortality rates exists along all index values, both in Arab localities and Jewish localities. Gaps in mortality exist in all age cohorts, and are especially high among infants and children up to age 4. On average, the additional deceased people in the weaker localities lose 33 years of life, of which 12 are during working ages.
Figure 1
Rates of age-adjusted deaths per 1,000 people and the socioeconomic index in localities with more than 10,000 residents, divided by nationality of majority of residents

The higher rate of illness in weaker localities is also reflected in higher hospitalization rates. The hospitalization rate (age adjusted) of residents of the lower half of localities is about 10 percent higher than its rate in the upper half—a gap that accounts for 5 percent of total hospitalizations in Israel each year (in 2014 terms, about 65,000 hospitalizations, at a cost of NIS 630 million). The analysis indicates that in contrast to hospital services, people with lower incomes use many community health services less than people with higher incomes. People in the lower half visit primary care doctors (family physicians, pediatricians, obstetrician/gynecologists, and internal medicine) more often, but use the services of secondary specialists less (-8 percent), and use the services of paramedicine professions (-32 percent) and MRI scans (-37 percent) much less. The gaps in use are also affected by differences in availability and access of health services in the community for various population groups. The composition of services to the weaker population, which tends to use community health services less and makes more use of hospitals, probably reflects a lack of efficiency and leads to treatment that is provided too late in degenerative diseases.
The Bank of Israel analysis also examines children’s health, and finds that it is correlated with parents’ education and with their lifetime income. For example, the children of parents who endured poverty five years or more in the past have a lower probability (by about 5 percentage points) today of having a very good health status. This link also exists when the examination excludes children who now belong to the lowest income quintile.
The analysis indicates that although the connection between socioeconomic status and health status is clear, the direction of causality is not completely clear, since there can be cases in which the reason for the connection is that the health status adversely impacted on the acquisition of education and income, and not the reverse. The Bank of Israel notes that the identification of the share of each causative direction has ramifications on the required policy: the more that low income, low educational attainment, and low socioeconomic status negatively impact health, the more social policy that improves the income, education, and status of people who have a low socioeconomic status will also improve their health. To the extent that the causality goes in the opposite direction, the health benefit that will be gained from improving the income of the poor and from investment in expanding their education will be more limited. Notwithstanding their share of each direction of causality, the correlation between socioeconomic status and health status can assist in identifying more acute health needs and in allocating resources to populations suffering from poor health (for example, by including socioeconomic statuses in the equation that divides health basket funds among the various health funds). In addition, the policy can attempt to directly influence the mechanisms that are likely to connect socioeconomic status with health. This is through education and incentives to maintain a healthy lifestyle and use of preventive medicine, improved access of weaker populations to health services, supervision of safety and health at dangerous workplaces, etc. Such steps are likely to especially help the health of weaker populations, and to decrease the link between socioeconomic status and health status.