Health and Wealth


By Matthew Yglesias

Brad DeLong recently linked to the website for a lecture by Erzo Luttmer that had the title “What Good Is Wealth Without Health? The Effect of Health On The Marginal Utility of Consumption”.

I have no idea what Prof Luttmer said or even what his talk was about. But recently I’ve been thinking a lot about the differences in living standards within the developed world and the phrase “what good is wealth without health” encapsulates something I’ve been thinking about a lot lately. When you look at the non-rich world, one of the best things about being a richer country rather than a poorer one is that your citizens can get healthier. And when you look within a country, one of the best things about being a richer person rather than a poorer one is that you can be healthier. But when you look among the rich countries, this doesn’t seem to be the case at all.

Spain is a rich country in the scheme of things, but it’s definitely poor compared to the United States on all measures. And yet it has a higher life expectancy. And nobody ever cites Spain as a social policy model so it’s not that they have a particularly exemplary health care system. Nor do they particularly invest many resources in health care—they spend a much smaller share of their smaller GDP on it. Spanish people are just healthier than Americans for lifestyle reasons. Spanish people, like Americans, are just past the threshold where society’s increasing wealth automatically leads to a healthier population. Indeed, in the U.S. we spend a lot of our wealth on health care interventions to remedy health problems associated with our unusually unhealthy lifestyles.

I don’t have a clear policy point to make about this. Nor would I say that greater wealth is worthless if it doesn’t produce greater health—I like my HDTV a lot. But the health-wealth linkage has a lot of intuitive power, and it’s true in a great many circumstances, but health is very important so the apparent breakdown of the health-wealth linkage ought, I think, to cause us to rethink some priorities.