Saturday, July 15, 2006

Healthy, wealthy, and wise?

Greg Mankiw reports that Daron Acemoglu's research suggests that improved health does not result in increased GDP.
My initial reaction? This does not make sense. Healthier workers don't tire as easily. They take fewer days off due to poor health, and are likely to be more productive per hour that they work. Look at the impact of AIDS on the economies of Africa.
Second reaction? Who cares? Interesting academic study. The anonymous commentator is right. Better health is a good thing in itself. It does not need to be justified by increases in the production of other goods.
Third reaction? The result is obviously true. Think of Kerala- its people are the healthiest in India, but its economy is not.

Perhaps this is an example of diminishing returns? Really poor public health can trap you in poverty, but as people's health improves, and life expectancy goes up (beyond 40 or so, when your kids are "grown up" and working?), improvements may cease to have dramatic effects. After all, diminishing returns from capital is old hat.

1 comment:

Anonymous said...

yes,very true! also kerala's people are the most literate lot but look at its economy.all those great armchair economists out there can do some real research for a about studying kerala's peculiar situation?