Economic consequences of better health: insights from clinical data

Most people will agree that healthier individuals and populations are likely to generate higher economic output than unhealthy ones. In this article we examine the evidence supporting a causal link between better health and future economic wellbeing. This link is plausible for several reasons. Firstly, healthier individuals are more productive at work and less likely to be absent from work. Secondly, health promotes the accumulation of human capital (that is, knowledge, skills, and experience)—healthier children are more likely to go to school, to learn, and to develop to their full human and economic potential. Thirdly, health motivates the accumulation of physical capital (that is, tools of production such as buildings, machines, and technology) because better health implies greater life expectancy, which increases the incentives to save for retirement. These savings will in turn be available for investment in physical capital. Fourthly, declining child mortality often leads to fertility reductions as parents realise that they need fewer children to ensure comfort in old age. However, this reduction in fertility typically lags behind the child health improvement that triggers it. Consequently, the ratio of working age adults to the young and the old who depend on them increases, thus providing favourable conditions for economic growth: the so called demographic dividend.1

A combination of historical, macroeconomic (using aggregate data at state or country level), and household studies provides ample evidence of the association between health and economic outcomes, as well as insights into potential pathways explaining these associations (box 1).456 Yet causal (as opposed to associational) evidence remains sparse and inconclusive, particularly at the macroeconomic level. The microeconomic research (using data on individuals and …