The Economics of Addressing Micronutrient Deficiencies

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The Economics of Addressing Micronutrient
Deficiencies

• Michael Schoenbaum
• May 23, 2005

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• The rich stay healthy,
• the sick stay poor.
• --U2, God Part II

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The rich stay healthy

• Higher status people live longer healthier
  lives
• Causal effect of economic status on health
• Access to more better food (extreme case
  nutrition wage trap)
• Access to medical care
• Access to education, including health-related
  knowledge
• Policy implication improving economic
  conditions will improve health

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the sick stay poor.

• Healthier people learn, work, earn more
• Causal effects of health on economic status
• Higher labor productivity
• Higher incentive to obtain education/skills
• Higher incentive to save
• Demographic dividend
• Policy implication improving health will
  improve economic conditions
• Ignoring economic benefits of health
  interventions undervalues those interventions

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Outline

• Theory why do we expect health to affect
  economic status?
• Evidence of economic benefits
• Policy effectiveness
• Agenda for the future

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Biology/physiology

• Iron deficiency
• May increase maternal mortality, preterm delivery
• Impairs psychomotor function, cognitive
  physical development
• Reduces stamina
• Iodine deficiency
• Causes mental retardation (cretinism)
• Impairs cognition, learning ability, motivation,
  school performance
• Vitamin A deficiency
• Increases morbidity mortality contributes to
  iron deficiency

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Biology/physiology (cont.)

• Vitamin D deficiency
• Causes rickets, poor growth
• Causes osteoperosis ( associated fractures)
• Vitamin K deficiency
• Increases neonatal morbidity mortality
• Vitamin K deficiency
• Increases neural tube defects
• We expect these effects to reduce economic
  status, relative to good health

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Economics/Demographics

• Economic theory
• (Improved health valuable in its own right)
• Higher physical capacity increases wages/income
• Health increases returns to education/skill
• Health motivates savings
• Demographic transition
• Improved health/mortality lowers fertility rates
• Quality vs. quantity
• Somewhat controversial historical data suggest
  that fertility decline preceeded mortality
  declines

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Linking to economic status

• Theory gives us strong priors
• Establishing empirical relationships is vital
• Theory could be wrong
• Technology of production could limit effects
• Magnitude of effects matters need to compare
  value of benefits to costs of attaining them

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Valuation Direct evidence

• Links specific health problems interventions
  directly to economic status
• Iron deficiency iron supplementation increased
  labor output, by up to 20 (rubber, tea, cotton
  workers)
• Iodine deficiency adequate iodine levels
  in-utero eliminates this cause of mental
  retardation
• Neural tube defects adequate folic acid levels
  in-utero reduce or eliminate this problem
• Calorie/protein deficiency supplementation
  increased labor output (effect varies
  considerably)

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Valuation Indirect evidence

• Link health economics via plausible inference
• Alternative paths of inference
• Health problems/programs ? intermediate economic
  outcomes (e.g., education)
• Intermediate outcomes ? economic status
• Health problems/programs ? intermediate health
  outcomes, such as antropometry, mortality
• Health outcomes ? economic status
• Assign economic value to health outcomes
  directly, using external metrics

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Valuation Indirect evidence (cont.)

• Education strongly linked to economic status,
  using micro and population-level data
• Micro-level health indicators linked to labor
  output, wages
• Anthropometry, e.g., height, weight-for-height,
  BMI, body fat , head circumference
• Functioning/activities of daily living
• Age of onset of puberty/menarche
• Population-level health indicators linked to per
  capita GNP
• Life expectancy (1??4? in GNP), adult survival
• Mean height

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Valuation Indirect evidence (cont.)

• Estimate societies willness to pay to avert an
  adult death, i.e., value of a statistical life
• 75-180 times per capita GDP
• Mortality approach to valuing mortality change
  multiply effect on mortality by value of a
  statistical life
• Used to generated expanded concept of national
  income
• Income as measured in national accounts
• Economic welfare income value of ? mortality
• Can extend to value ? mobidity quality of life

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Theory practice

• Efficacy vs. effectiveness
• Efficacy potential effect, under ideal
  conditions
• Effectiveness actual effect, under naturalistic
  conditions
• We know enough about efficacy to guide health
  policy in many key areas
• Effectiveness evidence must be strengthened
• Especially for developing countries
• True even for nutrition vaccination programs,
  where efficacy well-established!

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Some suggestions

• Expand evidence relating health problems/programs
  to economic status
• Additional dimensions of health
• More robust evidence
• Dynamic relationship between health economic
  status (e.g., do negative health shocks hurt
  temporarily and/or change life trajectory?)
• Design programs so they can be evaluated
• Experimental or quasi-experimental design
• Pre/post comparison
• Careful observational analysis

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More suggestions

• Actually conduct evaluation
• Measure effects on targeted health problem
• Measure implementation maintenance costs
• Try to measure broad set of outcomes
• Try follow subjects as long as possible costs
  are up front, benefits may be long-lasting
• Report results
• Tell people whatever you learned
• Try to monetize some of the benefits
• Disseminate institutionalize best practices