Improvements in health over the past 100 years have generated prodigious increases in living standards, far more than is measured by conventional national income statistics.
That is the central finding of new research by Kerry-Jane Hickson, presented to the Economic History Society's Annual Conference on Friday 8 April. Her results indicate the high value of spending on health care.
National income statistics do not include the health of the nation, an important part of the standard of living. Omitting health improvements means that the rise in gross domestic product (GDP) over the twentieth century understates the real rise in living standards.
Miss Hickson's research fills this void by providing more accurate, health-adjusted estimates of twentieth century GDP growth. As well as creating a more precise analysis of twentieth century health and economic welfare, the research provides a superior indication of the value of health care spending.
Twentieth century death rates are used for mortality, while health is represented by four major twentieth century diseases and disabilities: blindness, cancer (breast and stomach) and tuberculosis. As well as adjusting GDP, the research charts the twentieth century health and welfare history related to sufferers of these health problems. The key findings of this three-year study, are:
The contribution of improved mortality, since the introduction of the NHS, has been at least 56 per cent to overall GDP growth.
Mortality improvements have contributed at least 1.3 per cent to average annual GDP growth for the twentieth century.
The 'health standard of living': the extent to which sufferers were able to lead a full and normal life, doubled in the twentieth century, from 30 to 60 per cent, for the average burden of the most significant diseases in the economy (100 per cent being a completely health life year and 0 per cent being equivalent to death).
Although this morbidity burden detracts from the independent mortality contribution (1.3 per cent), because not all additional life expectancy has been lived in 100 per cent health, the combined mortality and morbidity GDP addition is likely to be, on average, in excess of 0.5 per cent per annum.
The morbidity burden of all diseases and disabilities has improved during the twentieth century, from a health and welfare quality of life perspective.
Although all social classes now enjoy improved health, the top social classes (the wealthiest people in the economy) have enjoyed greater improvements in the burden and survival prospects from most major diseases. For example, the study finds a clear social class gradient for survival from breast cancer in females, which was consistently about 10 per cent more favourable for the top social class (I) versus the lowest (V).
The study also considers why health has improved. For all periods of the twentieth century, environmental, government welfare, personal nutrition, lifestyle traits and medical factors are evaluated for their contribution to improving the quality of life associated with health.
Kerry-Jane Hickson concludes: 'Out of all these variables, medical progress - including prevention, therapy and ultimately cure - has been the single most important category for increasing health-related standards of living, particularly during the second half of the twentieth century, after the introduction of the NHS.'
Miss Hickson's work contributes to a new view of health economics, showing that health improvements have generated prodigious increases in economic welfare in twentieth century England and Wales.
She said: 'Despite escalating health care costs, there is a significant standard of living return to health spending. People value life and health very highly, and policy-makers should be aware that the social productivity of health care spending is likely to be many times that of alternative public and private spending.'
The Impact of Improved Health upon Standards of Living in Twentieth Century England by Kerry-Jane Hickson was presented at the Economic History Society's Annual Conference at the University of Leicester on Friday 8 April 2005.
Kerry-Jane Hickson is a postgraduate student based at the Economic History Department of the London School of Economics and Political Science.
11 April 2005