Academic journal article The Journal of Developing Areas

The Preston-Curve and the Contribution of Health to Economic Well-Being: Evidence from the Dhs of India and Four African Countries

Academic journal article The Journal of Developing Areas

The Preston-Curve and the Contribution of Health to Economic Well-Being: Evidence from the Dhs of India and Four African Countries

Article excerpt

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

In the milieu of the traditional intellectual predilection in the mid-seventies that higher incomes must improve health (e.g. Mckeown, 1976), the intriguing article by Preston (1975) stimulated conventional scholarship and invoked policy debate. The joint evolution of cross-country life expectancy and income during the twentieth century in Preston's framework suggests the modest influence of income in improving aggregate health (e.g. life expectancy), albeit there are strong cross-sectional correlations. The increasing and concave Preston curves, as graphed with cross country data for consecutive decades, shifted upward or rightward over time.' This rendered fallacious the conventional conjecture about the dominant impact of income on health. An upward shift of the curve means countries achieve increases in life expectancy without increases in the GDP per capita. A rightward shift on the other hand would imply countries not increasing their life expectancy despite increments in GDP per capita. While his work highlights the extent of disassociation of mortality from economic level, it also provides grounds for investigating the health selection impact - i.e. the impact that exogenous health improvements may have on economic well-being at the aggregate level.

Subsequently, much of the research on the joint evolution of health and income has focused on the cross-country relationship between population health and national income (see e.g. Georgiadis et al., 2010; Pritchett and Viarengo, 2010; Case and Deaton, 2009; Bishai and Opuni; 2009; Taylor, 2009; Deaton, 2006; Hay, Jen, and Lievens, 2011; Soares, 2007; Bourguignon and Morrisson, 2002). Then with regards to the contribution of the improvement of health to the betterment of economic well-being, until recently the literature, in general, has found evidence of a positive, significant, and sizable influence of life expectancy (or some related health indicator) on economic growth." This view has been challenged in a recent paper by Acemoglu and Johnson (2007) by providing pessimistic estimates with respect to the impact of cross-country increases in life expectancy on income per capita. Acemoglu and Johnson (2007) provide an empirical analysis based on the international epidemiological transition, apparently led by the wave of international health innovations and improvements that began in the 1940s, and finds that there is no evidence that the large exogenous increase in life expectancy led to a significant increase in per capita economic growth.

A frequent empirical approach toward examining the impact of health on economic growth has been to focus on data for a cross-section of countries and to regress the rate of growth of income per capita on the initial level of health (typically measured by life expectancy, or survival rate), with controls for the initial level of income and for other factors believed to influence steady-state income levels. From the methodological perspective the growth regression approach has mainly offered evidence for the relationship between health and income using cross-country macro-level data. On the other hand, the microeconomic approach to establish the health-economy link has mainly involved experimental and quasi-experimental studies, which are intended to provide direct scientific evidence for the causal effect of health on the outcome studied; and observational studies, which are typically based on survey data and are estimated in conjunction with a model of behavior that seeks to provide a plausible argument for interpreting the evidence in a causal framework (Thomas and Frankenberg, 2002, p.106). Examples of microeconomic approaches in different context can be found, inter alia, in Husain (2010), Strauss and Thomas (1998), Suhrcke et al. (2005), Thomas and Frankenberg (2002), Ruger et al. (2006), Behrman and Rosenzweig (2001), Miguel and Kremer (2004), and Schultz (2002). …

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