Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

The positive cross-sectional relationship between socioeconomic status and health is well documented, but limited evidence exists regarding the effect of an experimental manipulation of social status on health. This paper estimates the effect of promotions on heart disease using data on British civil servants from the Whitehall II study. It identifies differences in departmental promotion rates – resulting in part from a wave of retirements by the World War II-era cohort – as a plausibly exogenous source of variation in promotion opportunities. We estimate several models exploiting this variation to measure the effect of promotions on heart disease. The results suggest that promotions can reduce the probability of heart disease by 6 to 18 percentage points over a 15 year period. These estimates appear robust and are several times larger than cross-sectional estimates in the previous literature.

We provide several theoretical and statistical explanations for this finding. In particular, we focus on the crucial role that an individual's reference point plays in determining his or her status. We show that if the reference point is determined relative to individuals of similar skill rather than individuals in the same department, theory predicts that the promotion effect should be largest when estimated using quasi-random variation, smaller when estimated using within-individual variation, and smallest when estimated using cross-sectional variation. This is exactly the pattern that we observe in our results. We also find support for this hypothesis in the conclusions of other studies that leverage quasi-experimental research designs.