Scholars Discuss Economic Impact of Health Improvements

June 6, 2007
Heather Dresser

Healthy societies are thriving societies for the most part, but how much so remains the subject of some contention. Two dozen scholars of economic development and health met at the Kennedy School May 30-31 to examine the relationship between major health gains at the national level and economic growth. The Conference on Health Improvements for Economic Growth was convened by David Weil, professor of economics at Brown University, and Ricardo Hausmann, director of Harvard’s Center for International Development.

A series of medical breakthroughs and public health interventions led to major increases in life expectancy and health status in the 20th century. Yet the economic growth implications of this improvement remain unclear. As the global community initiates a new set of health programs, it is an opportune time to ask what the consequences of this activity will be for economic development.

To that end, conference participants considered successful malaria eradication campaigns in India and the Americas, studies that attempt to identify the effects of health improvements on macroeconomic variables, an evaluation of the health and development impacts of providing family planning services, and a model of malaria’s impact on long-run income differences. They also analyzed four scenarios involving the impact of malaria eradication on specific aspects of economic growth in Zambia.

The participants agreed that a crucial question centers on the precise effects of disease control on productivity and fertility. If fertility gains outpace productivity gains, there is little scope for a health intervention to lead to rising levels of per capita GDP. Alternatively, if productivity gains — for example through better cognitive development in children — outweigh increases in fertility, the economic benefits will be greater. In either case, however, the balance of evidence suggests that the economic benefits of malaria eradication in Sub-Saharan Africa are likely to be fairly small, and to appear only in the long run, possibly a generation or longer. For this reason, participants cautioned against placing too much emphasis on short-term macroeconomic gains from disease eradication, despite the clear gains that accrue at a microeconomic level in response to health improvements.

According to Weil, “The potential of coordinated health interventions to alleviate human suffering is enormous. Whether these health improvements will translate into large economic gains is more uncertain. When we tally up the incremental effects of disease eradication on labor productivity, educational achievement, population growth, and so on, we don't see strong evidence of a big economic impact. But the evidence we have is far from perfect, and there is also the possibility that health improvements will affect the economy in some non-linear way, leading to structural changes that cannot be inferred from the data we are examining.”

The conference, a project of the CID Growth Lab, was hosted by the Center for International Development at Harvard University and supported by the Bill and Melinda Gates Foundation. Conference participants included economists and public health scholars from universities and international organizations, including Daron Acemoglu, Charles P. Kindleberger professor of applied economics, Massachusetts Institute of Technology; David Cutler, Otto Eckstein professor of applied economics and dean for the social sciences, Harvard University; and Paul Schultz, Malcolm K. Brachman professor of economics, Yale University.

For more information, visit the Conference web page.

Photo: Center for International Development at Harvard University

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(L-R) Sara Sievers, Christian Zimmermann, Murat Iyigun and Douglas Gollin.