Accounting for the Effect of Health on Economic Growth

Abstract

I use microeconomic estimates of the effect of health on individual outcomes to construct macroeconomic estimates of the proximate effect of health on GDP per capita. I use a variety of methods to construct estimates of the return to health, which I combine with cross-country and historical data on several health indicators including height, adult survival, and age at menarche. My preferred estimate of the share of cross-country variance in log income per worker explained by variation in health is 22.6%, roughly the same as the share accounted for by human capital from education, and larger than the share accounted for by physical capital. I present alternative estimates ranging between 9.5% and 29.5%. My preferred estimate of the reduction in world income variance that would result from eliminating health variations among countries is 36.6%.