When general equilibrium effects associated with fertility and population changes are incorporated into Weil’s analysis—which, as Acemoglu and Robinson (in Spence and Lewis, forthcoming) point out, implicitly assumes a fixed population size—the estimated impact of health on per capita income may be somewhat smaller. However, the aggregation methodology does not allow for certain behavioral responses to improved health, such as changes in savings rates or educational choices, which could possibly increase incomes in the long term. In a more recent paper, Ashraf, Lester, and Weil (2007) incorporate these additional channels by which health changes might affect growth, but they still find only modest income gains.

The conclusions from these combined micro-macro studies suggest some limitations. As discussed below regarding microeconomic studies (for example, Bleakley in Spence and Lewis, forthcoming), health improvements can improve economic performance but are unlikely to explain why some countries lag far behind others in material well-being. Moreover, because the most significant health improvements occur early in a person’s life, the associated income effects take a long time to come to fruition.

# **The Links between Individual Health and Productivity: Microeconomic Evidence on Health and Growth**

An alternative approach to studying links between health and income is to examine individual and household investments and their effects on household income. The advantage of this approach, given data of sufficient quality, is that we might have more confidence in attributing certain impacts to particular health or other variables.

The disadvantages of a microeconomic approach are that the results may not be easily applicable to other circumstances and that what may be true at the micro level may not apply for the population at large, because of external or general equilibrium effects. For example, if the labor market rewards individuals solely according to their health rank (healthier people get more job offers), then improvements in one person’s health will translate into increases in his or her income, matched by reductions in the income of others, and there will be no impact on aggregate income. More generally, as in Acemoglu and Robinson (2008), if workers use other factors of production that are in relatively fixed supply, such as land and capital, then health improvements that increase the supply of labor could conceivably reduce average output per worker. Microlevel studies cannot pick up such effects.

Despite these shortcomings, micro approaches provide important insights into the potential impact of health on economic well-being. Below we focus on two broad sources of health-related variation across individuals and see how these translate into differences in economic productivity. The first source of differences among individuals is in the basic inputs to a healthy and productive life; we report on the economic implications of these differences and on the results of interventions to improve nutrition and caloric intake, on the one hand, and to enhance early childhood development, on the other. The second source of differences is in the incidence of illnesses and the access to and use of medical treatments; we report the findings of select studies on the negative impacts of HIV and malaria on productivity and the economic impacts of treatments such as deworming tablets and antiretroviral therapy.

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