At the University of Chicago, we often say that “a little economics goes a long way” in understanding a problem. Hopefully this post is an example of that motto. Here I set out a simple framework and use it to think about the economic impact of different human-capital policies.

Better health means, in part, lower mortality, which is obviously an positive thing. Reducing mortality also means there will be more people around. But better health doesn't have to mean the return of Malthus, as some economists have argued recently.

Picture a place where children are so infested with parasites that they are listless and weak. Even when they are feeling well enough to go to school, they are so anemic that learning is difficult. While this could be a scene in many of today's poor, tropical countries, it was also typical in the southern United States less than a century ago. In 1910 about 40 percent of Southern children suffered from infection by hookworm, a tiny bloodsucking worm that invaded their intestines. Malaria also infected a large fraction of Southerners back then.

In fact, hookworm and malaria were so prevalent in the South that historians blame them for giving rise to the widespread stereotype of the “lazy Southerner.” Yet they were so successfully and thoroughly vanquished, that the notion of hookworm and malaria in the southern United States sounds improbable today.

The book launch for Health and Growth in Brazil occurred in two of the country's biggest cities, Sao Paulo and Belo Horizonte, Minas Gerais.  In both cities the audience of about 150 spanned academia, government and the private sector.   Discussion in both focused on measuring health and the link to growth, and on institutions.  Concerns over equity, funding tradeoffs, and the effectiveness and efficiency of service delivery dominated much of the discussion.  If early childhood development is so critical to child and adult health, and budgets are flat, where should cuts be made, and who decides?  Where economic benefits can be reaped from investments in health care services, issues of who pays across levels of government, and the role of patient contribution, were raised in the context of sustainable financing needs, an important next step in extending the results to policy.

The Commission on Growth and Development launched the much anticipated volume on Health and Growth this week. The launch took place in Brazil at  Banco de Desenvolvimento de Minas Gerais S.A. (BDMG) on June 15th. A second launch will take place on June 17th at the Fernando Henrique Cardoso Institute in Sao Paulo, Brazil.  Former Brazilian Presidents
Fernando Henrique Cardoso  and Itamar Franco will chair the events.  Presenters and discussants from both events include volume co-editor Maureen Lewis (Advisor, World Bank), Andre Medici (Senior Economist, World Bank), Antonio Augusto Anastasia (Vice Governor, BDMG), Paulo Paiva (President, BDMG) and Alfonso Henriques (President, Fundação João Pinheiro), and Marcus Pestana, State Secretary of Health.  Danny Leipziger, Advisor to the Managing Director of the World Bank and Vice-Chair of the Growth Commission, will also present the findings of the Growth Report. Please access the health volume here.

NPR's Brenda Wilson reports on the UN's new initiative to provide healthcare to women and children whose health has been jeopardized since the onset of the financial crisis. The initiative targets 49 countries with the highest rates of maternal and child mortality; 9 million children die in their first year of life and half a million women die during child birth each year. Listen to the full report here.

The controversy over the link between health and growth has spawned a broad range of research. The new volume “Health and Growth” that I edited with Michael Spence lays out some of the methodological, analytic and policy issues surrounding this debate. This blog is meant to enhance that effort to enrich and deepen the analysis and understanding of the topic. And I hope that it will kindle yet more controversy as that further stimulates research and debate. The three issues that appear to especially merit additional debate and discussion are:  (1) the methodological issues and the findings on the macroeconomic side; (2) the link across early childhood development, health status and growth; and, (3) the institutional issues that underlie the relationship between (public) health spending and both performance in health care delivery and the impacts on health status.

In a paper prepared for the African Economic Research Consortium entitled, Endemic Diseases and African Economic Growth, David Weil estimates the quantitative effects of disease on different aspects of the economy in Africa. Weil points out that there already exists abundant information on how being poor leads to worse health outcomes. However, this study evaluates the reverse causality - how disease impacts different economic sectors in society. Weil contends that this information is crucial for policy makers in determining how much good will result from some course of action, and wil thus allow different policy options to be compared. Read more here (.pdf).

After the conclusion of the Growth Commission workshop on the financial crisis, I wrote the following piece in the Financial Express on how India used its reserves in the financial crisis. I examine whether or not using reserves as a tool to provide insurance is effective. I look forward to your comments.