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Journal of Economic Literature 2015, 53(1), 102–114

http://dx.doi.org/10.1257/jel.53.1.102

A Review of Angus Deaton’s


The Great Escape: Health, Wealth,
and the Origins of Inequality†
David N. Weil*

This book explores the relationship between the material standard of living and health,
both across countries and over time. Above all, Deaton is interested in the question
of whether income growth contributes significantly to better health. His answer is no:
saving lives in poor countries is not expensive, and there are many episodes of massive
health improvements in the absence of income growth. As an alternative, he argues
that the cross-sectional correlation between health and income is induced by variation
in institutional quality, while over time, parallel improvements in income and health
have been a result of advancing knowledge. (JEL E23, I12, I14, I15, O15, O47)

1.  Introduction of GDP per ­capita, for which we can calcu-


late compound growth rates and, with some-

R obert Lucas famously wrote of eco-


nomic growth that once you start think-
ing about it, it is hard to think about anything
what more difficulty, make comparisons
across countries. Another dimension along
which there has been enormous change over
else. But what is economic growth? One time is human health. Reminding oneself of
aspect of growth is change in the goods the ubiquity of premature death, suffering,
and services that an economy produces. and disability that characterized the lives of
Compared to our ancestors, or to most of the previous generations, and that still charac-
other residents of our planet, those of us who terizes the lives of many people in develop-
live in developed countries today enjoy the ing countries today, is a good way to get some
benefits of a much better consumption bas- perspective on the importance of income as
ket: big houses, cars, air conditioning, restau- measured in conventional GDP.1
rant meals, and so on. These are the things Whether one includes health improve-
that are captured in conventional measures ment as part of “economic growth,” or

* Brown University and NBER. 1 A brave soul might even ask how these improvements

Go to http://dx.doi.org/10.1257/jel.53.1.102 to visit the compare in terms of their effect on human welfare. See
article page and view author disclosure statement(s). Weil (2014) for a discussion of this literature.

102
Weil: A Review of Angus Deaton’s The Great Escape 103

whether one restricts that term to apply only undergraduates and lay people can eas-
to income, is just a matter of labeling. But ily understand, but also enlightening and
there is a related substantive question: What challenging to even the most experienced
­
do the material standard of living and health scholar. Deaton takes the reader on a richly
have to do with each other? The Great detailed tour through a landscape of historical
Escape tells the stories of the enormous narrative, science, data from across the world,
improvements in health and income that and scholarly debate. And he is a superb
have taken place in the last few centuries, guide: erudite, lucid, humane, and witty.
and of the huge gaps that persist today, both
between and within countries. At the book’s
2.  Health and Wealth
core is an examination of the causal relation-
ship between income and health, and par- Improvements in health and economic
ticularly the question of whether increasing growth (in the narrow sense of rising
income in poor countries is a good way to income) have much in common in terms of
bring about health improvement. Deaton’s their timing, geographical origins, spread,
answer is, in brief, that income affects and underlying causes. The sustained
health outcomes much less than you prob- economic growth that began in Europe with
ably think. the Industrial Revolution was preceded by
This review focuses on the relationship millennia in which the conditions of life
between income and health, but it would hardly changed at all, and in which cross-
be a disservice to the potential reader to country differences were relatively modest.
give the impression that this is all that the The material standard of living has been
book is about. In fact, The Great Escape utterly transformed in the countries that
encompasses a far broader range of topics. started growing first, and enormous income
Deaton embeds both health and wealth in gaps have opened up between countries.
a framework of “well-being,” and discusses From its starting point in northwestern
how to define and measure this concept. He Europe, the contagion of economic growth
also addresses other measurement prob- spread to other parts of Europe and
lems, including international comparisons North America in relatively short order,
of income and the construction of poverty and later to Japan and South America. In
thresholds. Issues outside the usual domain the post–World War II period, growth
of economics, both moral (for example, the has spread further still, with late starters
extent of a person’s responsibility to help such as The Republic of Korea and China
others in need) and philosophical (how putting on great bursts of speed in which
to evaluate the welfare consequences of a they grew at rates far greater than anything
larger population) are touched upon, as well. experienced by the early starters.
Throughout the book, there is a persistent In the case of health, the pattern was sim-
focus on the welfare of those worst off. The ilar. There is little evidence of trend change
book’s overarching metaphor, and the source in health prior to the middle of the eigh-
of its title, is the idea that humanity’s escape teenth century, unless one goes back to the
from material deprivation and premature transition from hunting and gathering to
death has been tied up with inequality: at agriculture, at which time things got worse.
first, only a few escape, and many are left And while there existed health differences
behind. among countries prior to industrialization,
All of these topics are woven together in with the tropics being particularly unhealthy,
an elegant narrative, written at a level that the gap was small in comparison to what was
104 Journal of Economic Literature, Vol. LIII (March 2015)

to ­follow.2 The same countries that led the advanced countries—but this is something
pack in terms of income growth saw health that Deaton spends relatively little time on
improve first, and as with income, many in his book, since his concern is more with
countries that started their health improve- those not lucky enough to be at the frontier.
ments later experienced gains at a speed The most notable relationship between
far faster than anything the leaders had income and health is in cross-country data.
achieved. This was particularly true during Preston (1975) first plotted and interpreted
the “international epidemiological transi- the relationship between income and life
tion” in the middle of the twentieth century, expectancy. Deaton begins his analysis by
when a number of health technologies were showing a plot of the “Preston curve,” and
transferred rapidly from the developed to much of his book is devoted to thinking about
the developing world (see Acemoglu and what the curve means. The Preston curve
Johnson 2007). certainly fits well. Using data from 2010, the
There is also a similarly eerie constancy in correlation between the log of GDP per cap-
the trend growth rates of income and health ita and life expectancy is 0.84 when countries
in the most advanced countries. As discussed are weighted by population (and only slightly
by Jones (2002) and Lucas (2000), among lower if they are not weighted). The relation-
others, the rate of growth of output per cap- ship is not far from linear, with a doubling
ita over the last 140 years in the United States of GDP per capita being associated with an
(the world largest rich country for most of the increase in life expectancy of roughly five
period) has been nearly constant, at roughly years. An interesting point is that the fit of
2 percent per year. Similarly, in the analysis the Preston curve has been improving over
of Oeppen and Vaupel (2002), life expec- recent decades. Using data for 1980 (and
tancy in the “best practice” countries (those the same sample as the previous calcula-
with the highest life expectancy in the world) tion), the weighted correlation between the
has increased linearly since 1840 at a pace of log of GDP per capita and life expectancy is
three months per annum, with no sign of a only 0.52. Almost the entire improvement
slowdown. In each case, these steady head- in fit can be attributed to a single country,
line results reflect ferment beneath the sur- China, which was an enormous outlier (high
face. For life expectancy, the sets of diseases life expectancy relative to income) in 1980,
that were being controlled, the means used and has since moved back in line. The cor-
to conquer them, and the ages at which death relation between income and life expectancy
was being rolled back have changed dramati- is echoed with other measures of health,
cally. In the case of income, increased invest- including absence of anemia, fraction of
ment rates in human and physical capital, babies that are low birth weight, and years
massive structural change, the demographic lost to disability (Weil 2014).
transition, and a sea-change in the nature of There is also a significant relationship
R&D—what Jones calls a series of “grand between income and health that is observ-
traverses”—have netted out to constant able within countries. Gwatkin et al. (2007),
overall growth. Whether these mysterious pooling data from Demographic and Health
linear trends remain in place going forward surveys for fifty-six developing countries,
is an issue that will have enormous impact show the wealth gradients for a number of
on the welfare of residents of the most health indicators. For example, the under-
five mortality rate varies by a factor of almost
two, from 135.4 to 73.5 per thousand, moving
2 Depetris-Chauvin and Weil (2013). from the bottom to the top wealth quintile.
Weil: A Review of Angus Deaton’s The Great Escape 105

In the United States, mortality probabilities (2) ​y​ i​  = β​​hi​ ​  +  ​ϵ​ i​  .


for most demographic groups fall with life-
time income (Cristia 2007). For example, Discussion of the relationship between
men aged 50–64 in the top quintile have health and income can then be conducted in
mortality probabilities 60 percent lower, and terms of the slope coefficients, as well as the
women 40 percent lower, than those in the variances and covariances of the two error
bottom quintile. Other measures of health terms. The next two sections of this review
are also correlated with income. Height is discuss these structural equations in turn.
often used as a summary measure of the
cumulative effects of nutrition and health
3.  The Effect of Income on Health
insults prior to adulthood. As Deaton shows,
in developed countries, height has risen on The idea that the Preston curve rep-
average roughly ten centimeters since the resents, at least in some significant part,
middle of the nineteenth century. Within a causal effect of income on health hangs
countries, height is correlated with income, over much of Deaton’s book. It is an issue
the relationship being stronger in poorer to which he repeatedly returns, in part
countries. In the United States and United because the idea is so seductive: “If the dis-
Kingdom, Case and Paxson (2010) estimate eases of poor countries are indeed ‘diseases
semielasticities of wages with respect to of poverty’ in the sense that they will van-
adult height (controlling only for ethnicity) ish if poverty is reduced, then direct health
of between 0.48 percent and 1.1 percent per interventions may be less important than
centimeter. Vogl (2012) and Thomas and economic growth. Economic growth would
Frankenberg (2002) find semielasticities of be ‘twice blessed’; it would increase material
wages with respect to height in centimeters living standards directly and improve health
of 2.5 percent in Mexico and 3.1 percent in as a bonus.” (p. 106). This is exactly the error
Indonesia. away from which Deaton works hard to steer
In addition to this between- and the reader.
within-country variation, there is also the Causality running from income to health
temporal covariation noted above: after could have manifestations in both the time
millennia of stagnation, health and income series and cross-sectional domains. In the
began improving at roughly the same time. time domain, the idea was associated origi-
All of these data establish that in a statisti- nally with Thomas McKeown, but was pro-
cal sense, income and health are certainly pounded most vigorously in recent years by
related. The question is, what is the nature Robert Fogel. Looking at the historical expe-
of that relationship? riences of developed countries, McKeown
Any well-trained undergraduate can famously claimed that the bulk of observed
answer that question, at least in a superficial declines in mortality from a number of infec-
fashion: The correlation results from income tious diseases took place prior to the deploy-
causing health, from health causing income, ment of both medical treatments such as
from some other factor(s) causing both, or drugs and vaccines, on the one hand, and
from some combination of these three chan- public health measures such as clean water,
nels. Putting that idea in a simple frame- on the other. Fogel focused more specifically
work, we can think of income (y) and health on nutrition, citing evidence on both caloric
(h) being simultaneously determined: intake and changes in body size over time. A
central pillar of his analysis is the so-called
(1) ​hi ​​  = α ​y​ i​  +  ​μ​ i​ Waaler surface, showing the ­ relationship
106 Journal of Economic Literature, Vol. LIII (March 2015)

between height, weight, and relative mortal- in the r­elationship between life expectancy
ity risk for middle-aged Norwegian men in and income. The increase in life expectancy
the 1960s and 70s. Superimposing changes experienced in a country over time can be
in average height and weight over the last decomposed into the part due to higher
two centuries on the Waaler surface (for income (movement along the Preston curve),
example, the French went from roughly 161 and the shift in the curve itself. Preston’s cal-
cm and 45 kg in 1705 to 172 cm and 72 kg culation was that less than one quarter of the
in 1975) predicts a large drop in mortality. average mortality improvement observed
Fogel (1997) calculates that this change between 1930 and 1960 was due to move-
alone explains 90 percent of the reduction in ment along the curve, with the remainder
French crude death rates between 1785 and due to shifts in the curve. In other words,
1870, and a further 50 percent of the reduc- income gains were not the primary source
tion between 1870 and 1975. Floud et al. of health improvements (although it is worth
(2011) calculate that over a roughly similar noting that the Fogel/McKeown argument is
time period, age-standardized calorie con- primarily meant to apply to a period prior to
sumption in France rose by 65 percent. the one examined by Preston).
Deaton argues that McKeown was right Deaton’s own narrative of the health
about the large mortality declines from improvements over time puts less weight on
infectious diseases in early developing coun- nutrition and more on knowledge. In partic-
tries preceding the arrival of medical treat- ular, he focuses on the improved understand-
ments, but not about their preceding the ing of disease and its control as the driving
deployment of public health interventions. force that produced the greatest improve-
As an example of the importance of pub- ment in life expectancy. In this story, no sci-
lic health interventions, Cutler and Miller entific advance is more important than the
(2005) estimate that water filtration and germ theory of disease, which allowed for
chlorination alone accounted for 43 percent the introduction of effective public health
of the decline in mortality in a sample of infrastructure, particularly clean water, as
U.S. cities over the period 1900–1936. While well as numerous other changes in behavior
Deaton does not reject the idea that better that reduced the burden of infection. Other
living standards promoted better health, he vital pieces of knowledge include:
downplays it. Indeed, Deaton’s Great Escape
began life as a review of Fogel’s book, The • The discovery that smoking was harm-
Escape from Hunger and Premature Death, ful for health, made salient by the U.S.
1700–2100, in the pages of this journal Surgeon General’s report of 1964,
(Deaton 2006). Among the pieces of direct although much of the information was
evidence he brings to bear, he points out available before then
that until 1750, the well-fed British nobil- • The development of a series of cheap,
ity had no higher life expectancy than the effective treatment regimens for man-
general population. He also argues that the aging high blood pressure, which pro-
bigger bodies on which Fogel focuses were duced a massive decline in death rates
the result not only of more nutrition, but also from cardiovascular disease in devel-
less infectious disease. oped countries after 1970
The most important piece of evidence • Oral rehydration therapy for diarrhea,
against the Fogel/McKeown view is the invented in 1973 during a cholera out-
one noted by Preston himself in his origi- break in Bangladeshi and Indian refugee
nal article: the shifting upward over time camps, and described by The Lancet as
Weil: A Review of Angus Deaton’s The Great Escape 107

“potentially the most important medical doctors their first effective treatment for
advance of this [the twentieth] century” many bacterial infections. Jayachandran,
Lleras-Muney, and Smith (2009) estimate
These gains in knowledge often led to syn- that these drugs raised life expectancy in the
chronized declines in mortality across sets United States by between 0.4 and 0.8 years
of countries that were at different stages of over the period 1937–43. Scientifically, sulfa
economic development. drugs were spun off from the dye industry,
The knowledge-driven model of health based on synthetic chemicals derived from
improvement provides a natural explana- coal tar. The drug development looked much
tion for the temporal covariation between like R&D as described by modern growth
income and health: growth in health knowl- theorists: an industrialized invention pro-
edge had its source in the same scientific cess undertaken by a profit-maximizing
revolution, and the attitude of experimenta- firm looking to use both secrecy and pat-
tion originating in the Enlightenment, that ents to reap monopoly profits (Lesch 2007).
brought forth new technology for producing (Unfortunately for I.G. Farben, the company
output. Like two rockslides triggered by the that did the drug development, it turned out
footsteps of the same careless mountaineer, that the active component in sulfa drugs was
these two intellectual juggernauts proceeded a molecule whose patent, issued in 1909, had
in parallel to reshape the human condition. already expired.) Examples like this suggest
Of course, there were important intellec- that without ongoing economic growth, the
tual links between the development of growth of health knowledge would have
health-producing technology and the devel- stalled out at some point in time.
opment of output-producing technology, so The knowledge-driven model of health
the description of them as parallel landslides improvement provides a natural explanation
is something of a caricature of Deaton’s nar- for the upward shifts of the Preston curve,
rative. Still, my own feeling is that Deaton especially in the second half of the twen-
understates the role of economic growth and tieth century, when the infrastructure for
increased income in producing the health spreading medical advances worldwide was
knowledge that was so instrumental in saving firmly in place. The converse of this obser-
lives. Indeed, to the extent that he stresses vation is that knowledge, at least in its pure
income’s role in producing that knowledge, form, is not a good candidate for explaining
it is on the demand side: industrialization cross-country differences in health outcomes
brought about infection-prone agglomera- today. Premature death in poor countries is
tions of people, which made discovery of the largely attributable to the same set of dis-
means to fight disease all the more import- eases that were responsible for most of the
ant. But economists who study technologi- premature death several centuries ago in
cal progress more broadly would emphasize today’s rich countries. There are exceptions
two other channels by which income growth to this rule, the most notable being malaria
produced health knowledge: by producing (a mostly tropical disease) and HIV (a new
better scientific tools, and by raising the disease). But the old-time killers—diarrhea,
willingness to pay for health discoveries. lower respiratory infections, tuberculosis,
Both of these channels are exemplified in and conditions arising shortly after birth—
the discovery of sulfonamide antimicrobial still do a large share of the grisly work. The
agents in the 1930s. Though soon overshad- knowledge of how to defeat these conditions
owed by antibiotics such as penicillin, “sulfa is widely available, at least in the sense that
drugs” were an enormous advance, giving even in the poorest country, there are some
108 Journal of Economic Literature, Vol. LIII (March 2015)

professionals who know what needs to be undone by behavioral change and the advent
done. The germ theory of disease does not of antiretroviral therapy. But it is hard to see
have to be rediscovered. differences in income per capita as having
If knowledge does not explain the played a large role in determining which
cross-country relationship between income African countries were most afflicted by the
and health, what does? It would certainly be scourge. Botswana, long the economic suc-
possible for the upward shift in the Preston cess story of the region but with a quarter of
curve to be the result of worldwide advance adults infected with HIV, is a case in point.
of knowledge, while at the same time the Finally, the United States, with its bloated
cross-sectional income–health relationship health spending and mediocre average out-
was still due to causality from income to comes, provides yet another piece of evi-
health. Once again, however, Deaton puts dence that more money does not always buy
little stock in this story. The most import- better health.
ant piece of evidence against this view is the If causality from income to health does not
observation that many of the health improve- explain cross-country differences in health,
ments that could save lives in poor countries and if the pure knowledge story does not
are not very expensive. This is made partic- explain it either (in the sense that sufficient
ularly clear from close examination of epi- knowledge to drastically reduce mortality
sodes of rapid health improvement. Caldwell exists even in very poor countries), we are
(1986) studied “mortality breakthroughs,” left with the question of what does explain
for example Sri Lanka over the period 1946 mortality gaps. Deaton’s answer is that the
to 1953, where life expectancy rose by twelve source of variation is in the application of
years. His conclusion was that such episodes knowledge—in particular through govern-
are more a matter of political and social will ment actions. Many of the important com-
to address health issues than of the avail- ponents of health improvement are public
ability of economic resources. Along these goods: “Turning the germ theory into safe
lines, Cutler, Deaton, and Lleras-Muney water and sanitation takes time and requires
(2006) point out that almost all of China’s both money and state capacity; these were
remarkable improvement in infant mortal- not always available a century ago, and in
ity took place before economic growth took many parts of the world they are not avail-
off in 1980, and similarly that the accelera- able today” (p. 97).
tion in growth in India following economic A final question to be addressed regard-
reforms in the early 1990s was accompanied ing causal links from income to health is the
by a slowdown in the rate of decline in infant importance of this channel in explaining the
mortality. Similarly, in Bolivia, Honduras, correlation of these two variables within
and Nicaragua, gains in life expectancy on countries. Institutions are not a great can-
the order of twenty years took place during didate to explain this relationship, since to
periods of modest or even negative income some extent these are the same for all cit-
growth (Soares 2007). izens in a country (only to some extent, of
The most important negative health shock course—the quality of institutions to which
of our time, HIV, also suggests a relatively an individual has access can vary according
small role for income’s effect on health. The to income, ethnicity, or location.) Similarly,
spread of HIV starting in the 1980s knocked knowledge in its pure form should be equally
as many as fifteen years off life expectancy in available to everyone in a country. Deaton’s
several sub-Saharan African countries, with answer again focuses on the application
some of that damage being subsequently of knowledge, in this case by individuals.
Weil: A Review of Angus Deaton’s The Great Escape 109

Education is a key determinant of health sanitation—for which governments need


because it allows individuals to apply knowl- money” (p. 32).
edge in their own lives (and also allows them As The Great Escape is not a quantita-
to know what government could be doing for tive monograph, Deaton does not need to
them). This effect is easiest to see when new take a stand on the precise magnitude of the
pieces of knowledge become available, and effect of income on health, in other words,
then are differentially taken up. For example, the value of the parameter α in equation (1).
in the late nineteenth century, prior to the Further, he would probably (and correctly)
widespread acceptance of the germ theory of say that the effect of income in health var-
disease, the children of doctors and teachers ies with both the institutional setting and the
had only slightly lower mortality rates than state of technology. For example, new med-
average. By 1925, when knowledge about ical technologies are often expensive, so in a
how to control infection was available to be period when such technologies are coming
applied, such children had mortality rates on line, the structural effect of income on
that were one-third below average (Preston health might be temporarily large. Indeed,
and Haines 1991). Similarly, at the time of the process of new cures starting as luxury
the Surgeon General’s report in 1964, there goods before moving down market (exam-
was little variation in rates of smoking by ples are variolation for smallpox in the eigh-
education; by 1987, smoking among male teenth century and antiretroviral drugs for
college graduates had fallen to 17 percent, as HIV recently) is part of the story of escape
compared to 41 percent among high school and catch-up that characterizes the dynam-
dropouts (Preston 1996). The same type of ics of both income and health. And finally,
human capital that unlocks access to health there is good reason to think that the struc-
knowledge is also rewarded in the labor mar- tural effect of income on health varies with
ket, and this omitted variable induces a good the level of income itself: among the very
deal of the correlation between health and poor, increases in income facilitate the type
income. (Although, obviously there is also of consumption that is health-improving; in
a structural effect of income on health out- rich countries, this is probably not the case.
comes, via both nutrition and access to med- Summarizing all these effects in a single
ical care, which is particularly important in structural parameter would be contrary to
poor countries.) the approach of the book.
Deaton’s conclusion is that the “diseases of
poverty” that are the main killers in today’s
4.  The Effect of Health on Income
poor countries are overwhelmingly not
caused by poverty. As a corollary, the best While Deaton takes seriously the idea that
way to reduce the burden of these diseases income affects health, he pays little attention
is not to try to eliminate poverty, but to focus to possibility that causality also runs from
on health directly. And yet, for all the evi- health to income. It is not clear whether this
dence that he provides about the income is because he thinks that the effect is small,
not being too important for health, Deaton or because his primary interest is in what
does not take the view that income doesn’t determines health rather than in what deter-
matter at all. “Income must be important in mines income.
some ways and at some times. . . . Income is An extensive literature examines the
important in places where improving health effect of health on individual economic out-
requires better nutrition—for which people comes, with good reason. Not only is this
need money—or cleaner water and better an important question in its own right, with
110 Journal of Economic Literature, Vol. LIII (March 2015)

i­mplications for policy and welfare, but it is frontally and centrally in any comprehensive
also a question for which it is possible to find development strategy.” Fogel (1997), exam-
good identifying variation. Exogenous dif- ining the historical evolution of body size and
ferences among individuals or changes over calorie consumption in the United Kingdom,
time in specific health inputs can be matched concludes that over the period 1780–1980,
to outcomes such as wages or education to better nutrition raised labor input per work-
produce well identified estimates. Examples aged adult by a factor of 1.96.
of this approach include Behrman and Empirical attempts to measure the aggre-
Rosenzweig (2004), who use variations in gate effect of health on income are rare,
birthweight among identical twins to identify in part because of the difficulty of achiev-
the effect of fetal nutrition on education and ing identification. The most important
wages among adults; Almond (2006), who macro-level paper addressing this issue is
shows that individuals exposed to Spanish Acemoglu and Johnson (2007), who use
Influenza in utero had lower education cross-country variation in the exogenous
attainment and higher rates of disability than component of increased life expectancy
surrounding cohorts; and Bleakley (2007), during the international epidemiological
who uses geographic variation in hookworm transition to instrument for health improve-
prevalence, combined with rapid eradication ments. In their analysis, the effect of health
in the American South, to show a long-run on income is negative—that is, countries
effect of exposure to the parasite during that experienced larger exogenous health
childhood on education and wages. These improvements saw lower gains in income
and other studies create the presumption per capita. Acemoglu and Johnson attribute
that a country that is in aggregate health- their finding to two factors: first, the underly-
ier should, ceteris paribus, be richer. Thus, ing effect of health on individual productivity
the parameter β in equation (2) should be is small; and second, improvements in health
greater than zero. But microeconomic stud- resulted in large increases in population, the
ies, because they only look at one aspect of effects of which undid any positive effect of
health at a time, give little insight into just productivity on income per capita.3 Similarly,
how large β should be when the indicator of Ahuja, Wendell, and Werker (2007) find no
health in equation (2) is a summary measure, evidence of a negative effect of the HIV
such as life expectancy. health shock on average income in Africa,
A leading proponent of the view that there using circumcision as an instrument.
is a large structural effect of health on income My own work (Weil 2007) assesses the
is Jeffrey Sachs. For example, in Sachs importance of aggregate health improve-
(2001) he writes: “Improving the health and ments by building up from well-identified
longevity of the poor is an end in itself, a microeconomic estimates of the effects of
fundamental goal of economic development. health improvements on productivity. Unlike
But it is also a means to achieving the other Acemoglu and Johnson, I find that the effect
development goals relating to poverty reduc- of health is positive, but small. For exam-
tion. The linkages of health to poverty reduc- ple, translating the estimates into the units
tion and to long-term economic growth are used in the discussion of the Preston curve
powerful, much stronger than is generally above, a health improvement that raised
understood. The burden of disease in some life expectancy by five years would raise
low-income regions, especially sub-Saharan
Africa, stands as a stark barrier to economic 3 See Ashraf, Lester, and Weil (2009) for an evaluation
growth and therefore must be addressed of this channel.
Weil: A Review of Angus Deaton’s The Great Escape 111

labor p­ roductivity by 3.6 percent and output list institutions, geography, history, and so
per capita in the steady state by the same on. With so many common elements, we
amount. Recall that along the Preston curve might not be surprised that the error terms
in 2010, an increase in life expectancy of five are so highly correlated.
years is associated with a doubling of output However, there is an additional constraint
per capita. imposed by Deaton’s theory. Consider a set
Ashraf, Lester, and Weil (2009) go beyond of factors, X, that affect both error terms,
the static analysis of Weil (2007) to examine and for simplicity let these effects be addi-
the dynamic effect of health shocks. Their tive and linear. The equations for the two
simulation model allows not only for direct error terms are then
effect of health on productivity, but also for  
several other channels, including the effect of (3) ​ϵ​ i​  =  ​∑​   ​  ​γ​ j​  ​X​ i,  j​
j
better health on human capital investment,

the change in population growth triggered by (4) ​μ ​i​  =  ​∑​   ​  ​δ​ j​ ​ ​X​ i, j​ .
increased survival (stressed by Acemoglu and j
Johnson), and the negative response of fertility The correlation between ϵ and μ will be
to increased child survival. The effect that they determined by the variances and covariances
find is again relatively modest: an increase in of the X terms, as well as the two sets of
life expectancy from forty to sixty years would parameters γ and δ. Roughly speaking, there
raise GDP per capita in the long run by only are two possible situations under which ϵ
15 percent, and for the first thirty years after and μ will be very highly correlated. The first
such an increase, output per capita would be possibility is that a single one of the X vari-
lower than if health had not improved. In the ables explains most of the variance in both ϵ
context of the two-equation model presented and μ. In this case, it is easy to see why the
above, these results imply that causation from two will then be correlated. The other pos-
health to income could not be driving much sibility is that there are several X variables
of the observed cross-country correlation that contribute to the variances of both ϵ and
between the two variables. μ, and that ratios of the parameters relevant
to these variables in equation (3) and (4) are
​γ​  ​ ​γ​  ​
5.  Common Determinants of Health roughly equal, that is ​ __1  ​≈ ​__
​  2 ​ ≈ ⋯.
and Income ​δ​ 1​ ​δ​ 2​
While I can’t bring any particular data to
If the structural effects of income on bear against the second theory, it strikes me
health (α in equation 1) and of health on as unlikely. What, other than coincidence,
income (β in equation 2) are both small, then would explain two or more of the important
the observed correlation between health and omitted factors affecting health and income
income must result from the errors in these with the same ratio? By contrast, the first the-
two equation being highly correlated. This is ory does not require any great c­ oincidence.
hardly a radical idea. The first error term (μ) It only requires that a single factor be very
contains everything other than income that important.4
affects health, while the second (ϵ) contains
everything other than health that affects 4 Of course, one can imagine alternative stories: for
income. Not only is that, in both cases, a lot example, there might be one X variable that explains most
of things, but there are many of them that of the variance in ϵ while a different X variable that explains
most of the variation in μ, and these two X variables hap-
we would expect to enter both equations. pen to be very highly correlated. But possibilities like this
Among these omitted variables, one could are not very plausible either.
112 Journal of Economic Literature, Vol. LIII (March 2015)

The natural candidate for that factor governments provide. Finally, there is “the
is institutions, and indeed, the reader of irritating but frequently encountered prob-
Deaton’s book will already have been primed lem that projects do much better as experi-
to accept this view. In the case of health, ments than when rolled out for real” (p. 292).
much of his discussion of differences in More significantly, as currently conceived,
health outcomes across countries, as well aid is more likely to hurt than help institu-
as improvements over time, is centered on tional quality. Aid places a heavy burden on
government capacity. Government capacity already stretched government resources.
shows up in many dimensions: in the ability And, by eliminating the need to ask citizens
to organize large public health projects such for funds to carry out its activities, foreign
as clean water and sanitation; in the ability aid eliminates the need for governments to
to effectively mount public information cam- obtain the consent or approval of those they
paigns to encourage private health behav- rule, leading to long-run damage to the qual-
iors such as hand washing and condom use; ity of institutions. “[L]arge inflows of foreign
in the regulation of harmful behavior such aid change local politics for the worse and
as smoking; in the provision of communi- undercut the institutions needed to foster
ty-level health services; and in the ability to long run growth” (p. 294).
supervise private health providers. Though More surprisingly, the institutional per-
Deaton spends much less time discussing the spective also underlies much of the Deaton’s
determinants of income than those of health, discussion of measurement, a topic that
when he does address the issue, he places suffuses the book. Recording data—births,
institutions in the foreground. And of course, deaths, treatments applied, and so on—
the argument that institutions are the dom- requires much the same state capacity as
inant determinant of income has recently delivering services. Thus, the same insti-
been forcefully laid out by Acemoglu and tutional characteristics that lead to bet-
Robinson (2012) in their recent book. ter health and economic outcomes lead to
This institution-centric view of the world better data by which these outcomes can
finds expression in a number of other places be charted. Measurement is also a channel
in The Great Escape. It is present most affecting outcomes: when things are mea-
forcefully in the final chapter, which dis- sured, they become, politically and prac-
cusses the effects of foreign aid on both tically, easier to act upon. What is counted
economic growth in general and on health is a good indicator of how political power is
in particular. While Deaton allows that aid distributed. It is no coincidence that the fifty
targeted at health outcomes has had good years over which the U.S. government has
effects (though he thinks that raising it fur- made no adjustment to its poverty measure
ther would not), his view of aid targeted at (beyond indexing to inflation) correspond to
achieving economic development can only a period in which the political importance of
be described as dismal. The recent vogue the poor and near poor has been declining.
for project evaluation and randomized con- The insight that measurement is a useful
trolled trials does not impress him. External indicator of institutional quality and an input
validity is a serious problem, in his view, into institutional change gives Deaton’s book
along with the general equilibrium effects a pleasing unity. It is like a mystery story in
on prices that arise when small, successful which we discover at the end that the seem-
projects are scaled up. Similarly, there is ingly detached narrator—in this case, the
the problem of successful projects divert- available data —has in fact played a major
ing resources and undercutting services that part in the underlying action.
Weil: A Review of Angus Deaton’s The Great Escape 113

6.  Conclusion knowledge and health knowledge advanced


together, driven by the underlying advance
In Leviathan, Thomas Hobbes character- of science and the spirit of experimentation
ized the life of man in the state of nature as born of the Enlightenment. Among individu-
“nasty, brutish, and short.” The fact that so als within a country, the correlation between
many of us can now lead lives that are both income and health is strongly influenced by
long and suffused with material comfort is a human capital, which allows people to apply
blessing of which we should be ever mind- available health knowledge to their own
ful. And the fact that so many people in the lives, and also, of course, to earn more in the
world today still cannot lead lives like this labor market.
raises a puzzle deserving of our best intellec- The most compelling correlation between
tual efforts. income and health is that observed in coun-
The most compelling questions addressed try averages, the so-called Preston curve.
in Angus Deaton’s book are about health: Whatever omitted factor drives this correla-
Why are poor people—both poor people tion must be extremely powerful, because
who live in rich countries and almost every- the correlation is very high. The natural sus-
one who lives in poor countries—so much pect, and the one that Deaton points to, is
more likely to die than rich people? And, the quality of institutions. Applying available
what do the gaps in health have to do with knowledge to stop people from dying from
gaps in income? diarrhea and lower respiratory infections
The idea that the answer to these ques- requires a government that is responsive and
tions might simply be “because higher accountable to all of its people, and that has
income makes people healthier” hangs over the capacity to achieve its goals. The same
much of The Great Escape. Deaton devotes institutional characteristics that make coun-
much of his considerable intellectual fire- tries good at producing output make them
power to demonstrating—convincingly, in good at organizing clean water and access
my view—that this is not the case. While to medical care. Thus, having started in a
income surely has some effect on health out- very different place—with germs and mal-
comes via nutrition, access to medical care, nutrition, rather than with parliaments and
and the ability of governments to afford pub- contracts—Deaton’s book ends up mak-
lic health spending, the salient fact is that ing a powerful contribution to economists’
there are many health improvements that evolving understanding of the importance
could be made that are very cheap. of institutions. Though the former focused
If causation running from income to his attention on violence committed by
health is modest, and if the same is true of men, and the latter on violence commit-
causation running in the other direction ted by microbes, Hobbes would approve of
(though Deaton pays much less attention to Deaton’s conclusion that a well-functioning
this second channel), then the observed cor- government is the actor that allows mankind
relation between health and wealth must be to escape the state of misery.
due to other factors. Which omitted variables
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