Child mortality and public spending on health : how much does money matter?

The authors use cross-national data to examine the impact on child (under 5) and infant mortality of both nonhealth (economic, cultural, and educational) factors and public spending on health. They come up with two striking findings: 1) Roughly 95 percent of cross-national variation in mortality can be explained by a country's per capita income, the distribution of income, the extent of women's education, the level of ethnic fragmentation, and the predominant religion. 2) Public spending on health has relatively little impact, with a coefficient that is numerically small and statistically insignificant at conventional levels. Independent variations in public spending explain less than one-tenth of 1 percent of the observed differences in mortality across countries. The estimates imply that for a developing country at average income levels, actual public spending per child death averted is $50,000 to $100,000. This contrasts markedly with a typical range of estimates for the cost-effectiveness of medical interventions to avert the main causes of child mortality of $10 to $4,000. They outline three possible explanations for this divergence between the actual and apparent potential of public spending: the allocation of public spending, the net impact of additional public supply, and public sector efficacy.