Does Better Health Make Countries Richer?

How economists study the link between health and economic growth, from hookworm eradication to iodine supplements and demographic dividends.

Richer countries are healthier. But does better health also make countries richer? Economists have found evidence that it can.

Channels from health to wealth

Productivity: healthy workers can work harder and longer.
Education: healthy children attend school more and learn better.
Savings and investment: people who expect to live longer save more for the future.
Demography: lower child mortality leads families to have fewer children, which can create a demographic dividend of more working-age adults.

Evidence from history

Economist Hoyt Bleakley studied the campaign against hookworm in the American South in the early 1900s. Areas with higher infection before the campaign saw bigger gains in school attendance and literacy afterwards, and children who benefited later earned more as adults.

Evidence from iodine

Iodine deficiency during pregnancy can harm children’s brain development. A study by economists Erica Field, Omar Robles and Maximo Torero of an iodine supplementation programme in Tanzania found that children whose mothers received iodine during pregnancy completed more schooling. This is one reason why iodised salt, required in India, is considered a very cost-effective policy.

Debate over macro effects

Some economists, such as Daron Acemoglu and Simon Johnson, studied the global improvement in life expectancy after 1940. They found that while health improved, population growth rose and income per person did not rise much in the short run. Others argue that health’s benefits appear more strongly over longer periods and through education.

Health as a goal in itself

Even where economic effects are debated, most economists agree that health is valuable in itself. The value people place on longer, healthier lives is large, and some studies suggest gains in health have added substantially to improvements in overall welfare beyond income.

The healthier classroom

After a village gets clean water and a deworming programme, children fall sick less often. Attendance improves and test scores rise. Years later, these children are more likely to finish school and get better jobs, contributing to the local economy.

Thinking health spending is only a cost

Health investments can boost education, productivity and growth, while also being valuable in their own right.

Key takeaways

Better health can boost productivity, education, savings and demographic change.
Hookworm eradication in the U.S. South raised schooling and later earnings.
Iodine supplementation in Tanzania increased schooling.
Economists debate short-run macro effects, but health is valuable in itself.