# **1. Introduction**

Income-related health inequalities and inequities have been receiving increasing attention from policy and academic communities in recent years. A large body of empirical work in developed and developing countries has focused on measuring and explaining socioeconomic inequalities in various dimensions of health (e.g., Acheson 1998; Schalick and others 2000; van Doorslaer, Wagstaff, and Bleichrod 1997; Wagstaff 2000).<sup>1</sup> Some research has also focused on socioeconomic inequalities in the distribution of health services or public spending on health care. In OECD countries, this work has been concerned with horizontal equity in the delivery of health care (LeGrand 1978; Propper and Upward 1992; Rosenzweig and Schultz 1991; van Doorslaer and others 2000; van Doorslaer and Wagstaff 1992; Wagstaff, van Doorslaer, and Paci 1989). In contrast, most work on the distribution of health services in developing countries has focused on the narrower issue of equality.<sup>2</sup> In some cases, data on the use of health services have been combined with public expenditure data to assess the incidence of public spending (e.g., Castro Leal and others 2000; Demery 2000; van de Walle 1995). However, in the absence of service-specific unit cost estimates, many studies have restricted attention to binary indicators of whether a person used a particular service or not (e.g., Baker and van der Gaag 1993; Makinen and others 2000; Sahn and Younger 2000).

In general, this work has highlighted the existence and severity of health-related inequalities and inequities in many contexts, and led to calls for more regular and focused monitoring of the distribution of health and health services (Gilson 1998; Gwatkin 2000). However, while the concept of socioeconomic inequalities in health and health care has intuitive appeal, the empirical analyses of these issues have been based on different measures of socioeconomic status (SES), including both continuous variables such as income and consumption and categorical variables such as social class, occupational group, educational attainment, or race.<sup>3</sup> In the case of developing countries, most of the work on socioeconomic inequalities in health and on the incidence of public spending has been based on living standard surveys, which typically collect detailed income and consumption data. However, more recently, efforts to bring measures of SES into the analysis of Demographic and Health Surveys (DHS) have led researchers to make use of data on household assets to construct alternative measures of welfare or living standards 1 Socioeconomic inequalities in health refer to the gradient between health and socioeconomic status, where socioeconomic status is defined in terms of some social, economic, or demographic characteristic. This can be contrasted to “pure” inequalities in health, which refers to the distribution of health itself (see, e.g., Gakidou, Murray and Frenk 2000; Illsey and LeGrand 1989; Murray, Gakidou, and Frenk 1999).

2 Equity requires that people in equal need of treatment receive the same treatment irrespective of their income. Hence, if illness incidence is unequally distributed along income lines, equity requires that utilization of services related to that specific illness be similarly distributed. In contrast, equality is concerned only with the distribution of the service itself. As this perspective does not require the analyst to control for need, data requirements are relaxed considerably.

3 The resultant lack of comparability over time and across contexts has been an important source of criticism of this literature (Gakidou and others 2000).

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