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POLICY FORUM: PUBLIC HEALTH
The positive correlation between health and income per capita is one of the best-known relations in international development (see figure). This correlation is commonly thought to reflect a causal link running from income to health. Higher income gives greater command over many of the goods and services that promote health, such as better nutrition and access to safe water, sanitation, and good quality health services.
Recently, however, another intriguing possibility has emerged: that the healthincome correlation is partly explained by a causal link running the other way--from health to income. Several mechanisms, falling into four main categories, could account for this relation:
Productivity. Healthier populations tend to have higher labor productivity, because their workers are physically more energetic and mentally more robust. They suffer fewer lost workdays from illness or the need to care for other family members who have fallen ill.
Education. Healthier people who live longer have stronger incentives to invest in developing their skills, because they expect to reap the benefits of such investments over longer periods. Increased schooling promotes greater productivity and, in turn, higher income. Good health also promotes school attendance and enhances cognitive function.
Investment in physical capital. Improvements in longevity create a greater need for people to save for their retirement. Insofar as increased savings lead to increased investment, workers will have access to more capital and their incomes will rise. In addition, a healthy and educated workforce acts as a strong magnet for foreign investment.
"Demographic dividend. " The transition from high to low rates of mortality and fertility has been dramatic and rapid in many developing countries in recent decades. Mortality declines concentrated among infants and children typically initiate the transition and trigger subsequent declines in fertility. An initial surge in the numbers of young dependents gradually gives way to an increase in the proportion of the population that is of working age (1). As this happens, income per capita can rise dramatically, provided the broader policy environment permits the new workers to be absorbed into productive employment (2).
All these mechanisms offer plausible ways in which health improvements can lead to income growth. However, examining the data allows evaluation of how important these mechanisms are. Recent economic analysis indicates that...