Extending decomposition analysis to account for unobserved heterogeneity and persistence in health behavior: Income-related smoking inequality among Swedish women.

Abstract

This article suggests an enrichment of the standard method for decomposition of the concentration index to account for unobserved heterogeneity and persistence in health behavior. As the underlying regression model in the decomposition, this approach uses a dynamic random-effect probit that both consider individual heterogeneity, using a Mundlak type of specification, and applies a simple solution to account for smoking persistence. I illustrate the suggested approach using a panel of Swedish women in Statistics Sweden's Survey of Living Conditions for one vital health-related behavior, smoking. The results highlight the importance of persistence and show that education and living in a single household are the main drivers of income-related smoking inequality.