between socioeconomic status and health outcomes. The rest of this paper is divided into seven main sections. The first sketches the implications of the principal economic model that has been used to analyze health outcomes. The second section presents a brief review of the existing empirical literature on the relation of racial health disparities to socioeconomic status. Using HRS and AHEAD, the third section describes racial differences in a variety of health outcomes. A brief summary of the income and wealth/health gradients obtained from these data is provided in the fourth section. Using these same data, the fifth section highlights both racial and ethnic differences in health risks. The sixth and major section of the paper summarizes a series of empirical models of self-assessed health status. In particular, these models focus on understanding the reasons underlying the strong correlation between income and health and on the implications of that correlation for racial and ethnic health disparities. The final section presents conclusions.
Most of the research addressing the relationship of socioeconomic status, race, and health has been grounded in a theoretical framework based in sociology. In this framework, social class or socioeconomic status is a way of ranking relative position in a society based on class, status, and power (Liberatos et al., 1988). Only relatively recently have there been significant efforts to explain the well-known differences in health across socioeconomic groups explicitly based on the economic model of health, especially to noneconomists (Selden, 1993; DaVanzo and Gertler, 1990; Dardanoni and Wagstaff, 1987; Wagstaff, 1986; Muurinen and Le Grand, 1985). Rarely have these analyses been extended to address the relationships among socioeconomic status, health, and race.
The standard economic model of health is based on a few key principles, largely developed by Grossman (1972). In the economic model, health is considered to be a commodity or "good" that can be viewed as a durable capital stock that produces a flow of services over time, depreciates, and can be increased with investment. Each individual begins life with a genetic health endowment. Choices made over the lifetime, such as the use of preventive medical services or smoking, can decrease or increase the health capital stock, but there are diminishing returns to investment in health. This capital can also be affected by random events that are not under the control of individuals.
There are a few important and distinct relationships that form the core of this model. First, there is the relationship between various inputs and the stock or commodity "health" (Ht). The inputs might include one's genetic or background endowment (Go), health promoting activities and other behaviors such as smoking (Bt), use of medical care (MCt), a vector of family education levels (ED), and