Deprivation and the health of Icelanders before and after the banking collapse

Abstract

In the wake of the collapse of the Icelandic banks in 2008, considerable changes were observed in Icelandic society. The national income distribution changed as purchasing power diminished with the collapse of the national currency. At the same time less income inequality is observed, due to compression at the upper tail of the income distribution. In this article, the potential impact of these changes on people’s health is estimated. Based on theories of social comparison, the relationship between deprivation and health is analyzed with 2007, 2009 and 2012 data from the national health study, Heilsa og líðan Íslendinga (Health and Wellbeing of Icelanders). In all three years, statistically significant interactive relationship is observed between absolute and relative deprivation and self-assessed physical health. These interaction effects do not change significantly over time. While both absolute and relative deprivation have increased after the 2008 collapse, people’s self-assessed physical health has not changed nor has the crisis had a direct effect on people’s physical health. However, it is important to note that a significant relationship is observed between deprivation and health, both during economic growth, and after the collapse of the Icelandic banks.