Poverty, Health Expenditure, and Health Status: A Long Term Perspective with Evidence from Nigeria
15 Pages Posted: 27 Jan 2010
Date Written: January 21, 2010
In Nigeria, health indicators have continued to experience downward spiral movement despite government continued budgetary allocation to funding the health sector. This downward spiral movement seems to pose a question whether government expenditure on health alone is significant enough to provoke improvement in the health status of the population, or rather, if there are other social/economic factors necessary to cause this desired improvement in health status which have hitherto been neglected? The paper had utilized the Granger causality test and Vector Error Correction Model (VECM) to investigate the causal direction and long-run relationship between government health expenditure, poverty and health status, in Nigeria. The study established that there exists a strong causal uni-directional relationship running from life expectancy to poverty in Nigeria. This paper contends that health improvements/expenditure when concentrated among people living close to or below the poverty line, a “trickle-down” mechanism and redistribution of income will lead to poverty reduction and illnesses. Thus, increasing budgetary allocation to funding health sector alone without reducing poverty level, would not be sufficient enough to improve the health and social status of the population. A long-run relationship was also found to exist between poverty and health status. The paper did not find a significant long-run relationship existing between health status and government health expenditure. The paper therefore suggests that policies that can improve life expectancy should be such as would promote adult literacy level, reduce the poverty level, reduce income disparity and improve income distribution among the vulnerable and poor rural population of the society.
Keywords: Health Status, adult literacy rate, government Health Expenditure, National Health Policy, Health Income Inequality
JEL Classification: D61
Suggested Citation: Suggested Citation