Health and Economic Growth: Reconciling the Micro and Macro Evidence

Economists use micro-based and macro-based approaches to assess the effects of health on economic growth. The micro-based approach tends to find smaller effects than the macro-based approach, thus presenting a micro-macro puzzle regarding the economic return on health. We reconcile these two strands...

Full description

Saved in:
Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Bloom, David E, Canning, David, Kotschy, Rainer, Prettner, Klaus, Schünemann, Johannes J
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2019
Subjects
Economic growth
Online AccessGet full text

Cover

More Information
Summary:Economists use micro-based and macro-based approaches to assess the effects of health on economic growth. The micro-based approach tends to find smaller effects than the macro-based approach, thus presenting a micro-macro puzzle regarding the economic return on health. We reconcile these two strands of literature by showing that the point estimate of the macroeconomic effect of health is quantitatively close to that found by aggregating the microeconomic effects, when carefully specifying the estimation equations and controlling for spillovers of health at the aggregate level. Our results justify using the micro-based approach to estimate the direct economic benefits of health interventions.