Economic growth and health progress in England and Wales: 160 years of a changing relation

Abstract

Using data for England and Wales during the years 1840-2000, a negative relation is found between economic growth--measured by the rate of growth of gross domestic product (GDP)--and health progress--as indexed by the annual increase in life expectancy at birth (LEB). That is, the lower is the rate of growth of the economy, the greater is the annual increase in LEB for both males and females. This effect is much stronger, however, in 1900-1950 than in 1950-2000, and is very weak in the 19th century. It appears basically at lag zero, though some short-lag effects of the same negative sign are found. In the other direction of causality, there are very small effects of the change in LEB on economic growth. These results add to an emerging consensus that in the context of long-term declining trends, mortality oscillates procyclically during the business cycle, declining faster in recessions. Therefore, LEB increases faster during recessions than during expansions. The investigation also shows how the relation between economic growth and health progress changed in England and Wales during the study period. No evidence of cointegration between income--as indexed by GDP or GDP per capita--and health--as indexed by LEB--is found.