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Semi-parametric regression results show that there was a complex non-linear relationship between income and SRH. Psychological distress substantially attenuated the association between relative deprivation and SRH. Conclusions Relative deprivation is negatively associated with self-rated health in both urban and rural older people after controlling the absolute income. RD may partly explain the association between income inequality and worse health status. Compared with the urban elderly, the effect of income-based relative deprivation on