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The relationship between health and economic development is explored, focusing on nutrition-based health indicators. The spotlight is placed on the interrelated feedbacks between the influence of health on productivity, on one hand, and the influence of income on health status, on the other. Disentangling causality in these relationships has preoccupied much of the literature; the authors evaluate different empirical strategies that have been adopted and assess the results. There is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity; there is also evidence that, at least among the very poor, additional income is spent on improved nutrition. There are two issues that have received little attention although, the authors argue, they are likely to be very important. First, measurement of health is discussed in detail. Evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages. The same theme emerges in studies of the effect of income on health (specifically calorie intake). The key role of non-linearities in these relationships is highlighted and the authors demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form.

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Originally published in: Journal of Economic Literature, v. 36, June 1998, pp. 766-817.

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