WHEN DOES IMPROVING HEALTH RAISE GDP?
Quamrul H Ashraf1, Ashley Lester2, David N Weil3
1Department of Economics, Brown University, 64 Waterman Street, Providence, RI 02912, Quamrul_Ashraf@brown.edu.
NBER Macroeconomics Annual
|December 19, 2013
Summary
Quantitative analysis shows health improvements have a delayed and smaller economic impact on income per capita than often claimed. Humanitarian arguments are more compelling for global health initiatives.
Area of Science:
- Macroeconomics
- Health Economics
- Development Economics
Background:
- Economic growth is influenced by various factors, including population health.
- Previous estimates of health's economic impact may be overstated.
- Understanding the long-term economic consequences of health interventions is crucial.
Purpose of the Study:
- To quantitatively assess the impact of exogenous health improvements on per capita output.
- To model both direct and indirect economic effects of better health.
- To analyze the influence of general health and specific diseases (malaria, tuberculosis) on economic outcomes.
Main Methods:
- Developed a simulation model incorporating health's direct effect on productivity.
- Included indirect effects via schooling, demographics, capital accumulation, and resource crowding.
- Parameterized the model with microeconomic data, demographics, disease burdens, and developing country income data.
Main Results:
- Health improvements have a substantially lower impact on income per capita than commonly cited.
- Significant economic effects may be delayed by three decades or more.
- The economic returns on health investments might not be immediate or substantial.
Conclusions:
- Humanitarian arguments are more robust than economic ones for advocating health improvements in developing nations.
- Policy-makers should temper expectations regarding the short-term economic gains from health interventions.
- Long-term, multifaceted economic modeling is essential for accurate health impact assessments.
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