ResearchBPEA | 1997: Microeconomics
Measuring the Health of the U.S. Population
VALUING THE HEALTH of the population is central to forming public policy for health care. It is frequently asserted that the marginal productivity of the medical system is low, so limiting overall medical spending would improve welfare. But gauging the productivity of the medical sector requires measuring the output of the medical system, which cannot be done without valuing the health of the population. Similarly, resource allocations must often be made within the medical sector: Should more be spent on research for the young or the elderly? Should the focus be on prevention or cure? But these decisions cannot be made without knowing the output of medical spending-in short, its health consequences. A great deal has been written from the private perspective about changes in the distribution of wealth and income over the past several decades. But utility depends on health as well as consumption, and to capture the utility consequences of recent changes in the economy, health must be valued as well. 3 Finally, the relationship between health and economic behavior is often of interest. Are the sick elderly more likely to retire than the healthy elderly? How is this relation changing over time? To answer these questions requires measuring health and its changes over time.