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The Health of Nations: The Contribution of Improved Health to Living Standards

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Abstract

Nations generally measure their economic performance using the yardstick of national output and income. It is not widely recognized, however, that conventional measures of national income and output exclude the value of improvements in the health status of the population. The present study develops a methodology and presents preliminary estimates of how standard economic measures would change if they adequately reflected improvements in health status. The study first discusses the theory of the measurement of national income, examines some of the shortcomings of traditional concepts, and proposes a new concept called 'health income' that can be used to incorporate improvements in health status. The study next discusses how the proposed measure fits into existing theories for measuring and valuing consumption and health status. The study applies the new concepts to data for the United States over the twentieth century and concludes that accounting for improvements in the health status would substantially increase the estimated improvement in economic welfare for the U.S. over the twentieth century.

Suggested Citation

  • William D. Nordhaus, 2002. "The Health of Nations: The Contribution of Improved Health to Living Standards," Cowles Foundation Discussion Papers 1355, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1355
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    File URL: http://cowles.yale.edu/sites/default/files/files/pub/d13/d1355.pdf
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    References listed on IDEAS

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    1. Dora Costa & Richard H. Steckel, 1997. "Long-Term Trends in Health, Welfare, and Economic Growth in the United States," NBER Chapters,in: Health and Welfare during Industrialization, pages 47-90 National Bureau of Economic Research, Inc.
    2. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1996. "Are Medical Prices Declining?," NBER Working Papers 5750, National Bureau of Economic Research, Inc.
    3. Eisner, Robert, 1989. "The Total Incomes System of Accounts," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226196381, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Health; income; growth;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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