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

William D. Nordhaus

NBER Working Paper No. 8818
Issued in February 2002
NBER Program(s):Economic Fluctuations and Growth, Health Care, Productivity, Innovation, and Entrepreneurship

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.

download in pdf format
   (473 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8818

Published: Nordhaus, William D. "Irving Fisher And The Contribution Of Improved Longevity To Living Standards," American Journal of Economics and Sociology, 2005, v64(1,Jan), 367-392.

Users who downloaded this paper also downloaded* these:
Murphy and Topel w11405 The Value of Health and Longevity
Bloom, Canning, and Sevilla w8587 The Effect of Health on Economic Growth: Theory and Evidence
Acemoglu and Johnson w12269 Disease and Development: The Effect of Life Expectancy on Economic Growth
Usher An Imputation to the Measure of Economic Growth for Changes in Life Expectancy
Nordhaus and Tobin Is Growth Obsolete?
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us