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 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.
The authors would like to thank participants of the VfS Annual Congress 2018 and the European Meeting of the Econometric Society 2018 and Ana Abeliansky, Michael Burda, Alexander Khoury, Holger Strulik, and Uwe Sunde for helpful comments and suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.