A Nobel Message on Health and Wealth

The 2015 winner of the Nobel Memorial Prize in Economics, Princeton economist Angus Deaton says it is too easy to think only of money as the way to escape poverty. Instead he explains that “health and wealth go hand in hand, with inequalities in health mirroring inequalities in wealth.”

In his most recent book, The Great Escape, he looks at both. His goal? Through a “snapshot” of health and wealth in the past and the present we can better plan for the future.

Where are we going? To a look at two of Dr. Deaton’s snapshots.*

Tall and Short Populations

Angus Deaton estimates that it will take 500 years for Indian women to reach the height of English women.

In The Great Escape, Dr. Deaton explains that a population could be short because of nutrition or disease. When babies consume inadequate calories or diets with too little fat, their development suffers. And even if they survived substandard sanitation or pests or no vaccines, still, disease would have stunted their growth.

Looking back at Europe, we can see that short populations have grown but it takes awhile. Mid-19th century European men (there is little data for women because military records are the source) averaged 5′ 5 1/2″. Slightly more than a century later, their counterparts were 5′ 10 1/2″. For the Netherlands, a fast growing country, the increase averaged slightly more than a 1/2 inch a decade. Dr. Deaton says the increase was from less disease and the improved nutrition that higher income creates.

Dr. Deaton predicts that contemporary short populations will catch up with those who are taller in richer nations. However, even if nutrition is much better and childhood diseases have been eradicated, it takes many years for populations to achieve their biological potential because “tiny mothers cannot have large children.”

Then, just when you expect all taller people to live in richer countries and the short populations to be poorer Dr. Deaton says, “It is not quite that simple.” Researchers are not sure why certain African populations are taller than South Asians and many Latin Americans.

Angus Deaton’s graphic ideally conveys height data about populations:

From: The Great Escape by Angus Deaton, p. 160.

Who Will Live To 100?

A middle class girl born in the US today has a 50/50 chance of reaching 100 years old. A guess, yes. But the prediction reflects what Angus Deaton says is rather likely.

Looking back at the steady increase in life expectancy, Deaton, in an Econtalk interview, said we developed a whole new attitude about germs during the past century. In 1910, a hotel would not have changed the sheets in a new guest’s room. And a young newborn would have had just an 80% chance of living beyond her 5th birthday. As the century unfolded, cleaner water, better sanitation, vaccinations, all extended life expectancy. The result was an average of three more months a year for more than 1 1/2 centuries.

Our Bottom Line: Development Economics

Explaining why Dr. Deaton deserved his Nobel award, economist Justin Wolfers said that development economics requires the convergence of micro and macroeconomics, of knowing “that to get the big picture right, you’ve got to get all the small details right, too.” It is a new world of economics that has scholars looking at country specific data rather than a past where there was one diagnosis for a disparate group of developing nations.

*Excerpted from previous econlife posts.