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.
Students of late-18th-century economics will recognize Thomas Malthus as the man who stated that society is doomed to stagnant near subsistence levels of income. The great mass of common folk, by their prurient nature, will breed and breed some more, the only constraint on fertility being starvation. Like poor Sisyphus from classical mythology---who was condemned to perpetually roll the rock up the hill, only to watch it roll back down again---societies could enjoy gains in productivity temporarily, but would quickly dissipate these gains by breeding them away, pushing down income per capita by increasing the number of capitas.
Malthus' forecast was pretty bad. His pronouncement came when wages, life expectancy, and population in Britain were all on the rise. Doom and gloom surely to follow? Well, around the same time, the British economy began the most extraordinary take-off the world had witnessed to date: the Industrial Revolution. It appears that we don't live in a purely Malthusian world. In the intervening centuries, the world has grown markedly in per-capita income, in spite of there being six billion more of us to feed than in 1800.
Nevertheless, two recent, well-known studies view health improvements through a basically Malthusian lens. The first is by Daron Acemoglu and Simon Johnson (Journal of Political Economy, 2007, and republished in the Growth Commission's volume on health). They examine the effects of a decline in mortality circa 1950 in cross-national data, and find increases in population, but no rise in economic output. (This result may be more Malthusian than Malthus himself in that it implies that the marginal output from those extra workers is zero. Contrast this with T.W. Schultz' classic study of the effect of the 1918 flu pandemic in India, where output declined substantially in areas that lost more population to the flu.) The second study is by Quamrul Ashraf, Ashley Lester, and David Weil (NBER Macro Annual, 2009). These authors use a standard economic model to simulate how increases in the effective labor force affect output. Their model---which confirms, to a degree, the Acemoglu/Johnson results---treats an economy as a single sector that is land dependent and has a slowly adjusting capital stock. Bottom line: these two studies argue that improving health affects the economy mainly by crowding access to productive assets.
Let's take a step back and think about the context for a bit: what did the typical less-developed country look like 50 years ago? The vast majority of its residents were in rural areas. Also, for most poor countries, this was the era of looking inwards as a growth strategy. Capital flows were sharply restricted, and as was international trade. All of these features make for a more Malthusian response: an increase in population means less land and less capital per worker. This sort of economy is the benchmark for the 2 studies above.
But does this seem like a typical developing country today? Not really, because of two big changes:
Urbanization: the developing world is way less dependent on land than it was a half century ago. As of a few years ago, the majority of the world's population lives in urban areas, continuing a long trend of migration to cities. Latin America, for example, went from 40% urban at mid-20th century to almost 80% today. Things today are less land-centered and more people-centered, with urbanization giving rise to what economists call “agglomeration economies” (that is, with increasing rather than decreasing returns to scale).
Globalization. This really consists of three parts: capital flows, international trade, and migration, all of which reign in the economy's Malthusian side. Allowing capital to flow across borders means that a country is not constrained by its own savings to finance investments. Openness to international trade allows a country to export the extra output when its population grows. Lastly, migration can act as a 'safety valve' when an area becomes overpopulated.
Finally, even if you are a firm believer in Malthus' idea, remember that not all improvements in health will increase population so automatically. In an earlier posting (and act of shameless self-promotion), I discussed some of my work on tropical parasitic disease. This class of diseases tend to cause persistent sickness rather than death. Tropical parasites are a particular burden to children, and can stunt critical stages of physical and cognitive development. Put together, these features imply that tropical parasites have their greatest effect, not by adding more bodies to the labor force, but by preventing their victims from achieving their full productive potential.
Malthus Schmalthus.
