What is Health? Looking over Time and Geography (Part II)
What's behind our doubling life expectancy and what can we do about the 2021 fall?
Today we look for answers to our campfire question by examining changes in human health over time, in particular, the doubling of average life expectancy since the 1900s.
1. High-Return Investment Good
Any savvy shopper looks for a high return to their money- where small payments today will compound to make big future payoffs. Consider health as a cornerstone investment good in a high-value growth portfolio!
On a personal level, we're often encouraged to 'invest in our health' through better nutrition or regular exercise, both which promise to pay off in the future- perhaps through improved leisure or working capabilities (See Part I).
Thinking bigger, this 'investment' effect is evidenced on a grand scale in prenatal and maternal health. In the 1960s in the US, nearly 18 infants died per 1,000 born, but it had more than halved to 7.7 per 1,000 by 1977. (In 2020, this number has dropped to 5.4.) Economic researchers found that one of the biggest contributions to the decrease was improved prenatal care. For black infants, it contributed 1.9 percentage points, or over 16 percent, of the 11.5 percentage point drop in neonatal deaths.[2]
These findings are also important in terms of picking our highest-value investment portfolio. Neonatal care for low birthweight infants has dramatically improved as well since the 1960s, with accompanying increases in cost. An average price tag for neonatal care during this period was $30,000 and long-term costs for complications in these infants averaged $40,000. In contrast, prenatal smoking cession programs cost about $50 per woman. Per infant life saved, accounting for both successes and failures in smoking cession, this prenatal intervention is still only about a third of the cost of neonatal care.[3]
2. Health is like Filet Mignon
Essential to labor production, enjoyable as leisure, a high-return investment—all these things make health seem pretty desirable. If you could buy more of it, you would! Economists call this kind of good a 'normal good'- the kind of good that you consume more of as you get richer. This is in contrast to an 'inferior good'- the kind of good you're only buying because you can't afford better. Like how you switched from constant ramen in your student days to occasional sirloin with that first job.
This characteristic is evident if you think of national income differences across countries. Within the OECD, the top 10 richest countries (highest GDP per capita) are also in the top 16 for health spending per capita. See them in the chart below floating like happy, colorful balloons of health spending on the right. Particularly note the extra high green balloon speeding skyward on the right—that's the U.S.'s 19.7 percent of GDP spent on healthcare in 2020. Note that the health spending balloons of the three poorest countries in the OECD-- Mexico, Turkey, and Columbia—are floating lowest. No helium health spending to spare when you're trying to shore up other parts of your economy.
3. Put Them Together: Double Your Life Expectancy
For an illustration of both these ideas, consider the dramatic (and historically unprecedented) increase in U.S. life expectancy since 1900. Average life expectancy in 1900 was just over 48 years old, yet this increased by over 30 years by 2020. How did we do this?
The first 50 years of improvement were largely due to investments in health. Infectious disease was widespread, and this particularly affects the young, leading to high levels of infant mortality. Public health investments such as sewers, clean water, and pasteurization reduced disease exposure and campaigns encouraging hand washing and improved nutrition led to stronger children who were able to survive the diseases they did encounter. (Use your new eyes for investments in human capital to analyze working conditions reform in Part I.) The invention of sulfa drugs and penicillin in the 1930s followed by widespread production in the1940s, particularly as a push of war efforts to treat wounded, decreased deaths at all ages.
In the 1950s, focus shifted to chronic disease, such as cardiovascular mortality, and a "medicalization" of health—a shift to an institutional focus, led off by the creation of the National Science Foundation and the National Institutes of Health. Improvements in health became individual, disease-focused, and highly specialized. Cutting edge research entities are a pricey normal good- Biden's latest budget allots $62.5 billion to the 27 NIH Institutes and Centers.[4]
On a current note, the shocking latest life expectancy number for 2021 shows a loss of over 3 years compared to 2019. A step back? Maybe, but perhaps a look back in history can drive home to us the importance of not neglecting investments in public health and assure ourselves of the rewards we reaped, through rapid vaccines, from our 'normal good' purchase of cutting-edge medical innovation.[5]
As always, keep me updated on what you’re up to or reach out to chat with me about these issues!
Best,
TMD
Continue with Part III, “Obesity, Solved” and Part IV, “A Great Resale Product.” Or go back to Part I, “Taking Stock”
[1] https://www1.nyc.gov/site/doh/about/press/pr2022/monkeypox-vaccination-prioritization-first-doses.page
[2] Other major contributions for both whites and blacks during this period were abortion legalization (#1) and the introduction of the WIC program (#3). Hope, Corman, Theodore J. Joyce, and Michael Grossman, "Birth Outcome Production Function in the United States," Journal of Human Resources 22 (1987): 399-360.
[3] Cutler, David, 2004. Your Money or Your Life: Strong Medicine for America's Health Care System, Chapter 3, New York, New York: Oxford University Press.
[4] NIH Office of Budget , August 31, 2022.
[5] https://www.nytimes.com/2022/08/31/health/life-expectancy-covid-pandemic.html