Healthy Bodies and Thick Wallets

The Dual Relation Between Health and Economic Status

by James P. Smith

There is abundant evidence of a quantitatively large association between measures of economic status and health outcomes, such as mortality or morbidity. However, considerable debate remains about the direction of causation and about why the association arises. Medical scientists are convinced that the dominant pathway is that variation in socioeconomic status produces health disparities, and they are increasingly debating among themselves about why low economic status leads to poor health. Economists are now exploring the impact that poor health has on economic resources. This work cautions against exaggerating the magnitude of one-direction causation from economic status to health outcomes. The first section of this paper documents the size of association between health and household wealth. The next section examines why health may alter household savings and wealth, and estimates the empirical magnitude of these effects. The third section summarizes major controversies and evidence surrounding the links between economic status and health.

Originally published in: Journal of Economic Perspectives, v. 13, no. 2, Spring 1999, pp. 192-196.

This report is part of the RAND Corporation Reprint series. The Reprint was a product of the RAND Corporation from 1992 to 2011 that represented previously published journal articles, book chapters, and reports with the permission of the publisher. RAND reprints were formally reviewed in accordance with the publisher's editorial policy and compliant with RAND's rigorous quality assurance standards for quality and objectivity. For select current RAND journal articles, see External Publications.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.