A growing between- and within-country literature suggests that the association between income inequality and health reflects individual- or area-level characteristics with which income inequality is associated, rather than the effects of income inequality per se. These studies also suggest that the association between income inequality and health is country-specific. Unresolved methodological issues include the geographical level at which to model the effects of income inequality, and the appropriate statistical methods to use. This study compares the results of single-level and multi-level logistic regression models estimating the association between income inequality and self-assessed health in local authorities in Scotland. The results suggest that there is a significant positive association between income inequality and health across local authorities in Scotland, even after adjusting for individual-level socio-economic status. They also suggest that there is significant local authority-level variation in self-assessed health, but this is small compared to the variation at the individual level. Income and other measures of individuals' socio-economic status are more strongly associated with self-assessed health than income inequality. This study provides further evidence that the income inequality:health association is place-specific. It also suggests that methodological choices regarding the ways of estimating the association between self-assessed health, individual-level socio-economic status and area-level income inequality may not make a substantive difference to the results when contextual effects are small. Further work is required to test the sensitivity of these conclusions to alternative levels of geographical aggregation.