1/21/2024 0 Comments Macro vs micro investing![]() ![]() Better health and higher life expectancy create incentives to invest in education (Cervellati and Sunde 2013) and in innovation (Prettner 2013). ![]() However, many indirect effects also exist. Most immediately is a direct effect of better health on worker’s productivity (Bloom and Canning 2002, Currie and Vogl 2012). ![]() Health improvements influence the economy through many pathways. Direct and indirect macroeconomic effects of health (2022), we resolve this puzzle by showing that the estimated direct effect of health on labour productivity is of similar size in both micro-based and macro-based approaches when holding constant the indirect effects of health, which are included in macro-based approaches only. This presents a micro-macro puzzle of the macroeconomic return to health. 1996, Acemoglu and Johnson 2007, 2014, Hansen and Lønstrup 2015) or 2.5 to 18.5 times larger than micro-based estimates (Barro and Lee 1994, Barro 1997, Bloom and Williamson 1998, Gallup and Sachs 2001, Bloom et al. While micro-based approaches document a moderate positive effect of health (Shastry and Weil 2003, Weil 2007), macro-based approaches find estimates that are either negative and close to zero (Caselli et al. Macro-based approaches, by contrast, estimate an aggregate production function that decomposes human capital into its components, including population health. Micro-based approaches aggregate the estimated effect of individual health on wages to the macroeconomic level. One reason for this debate is that economists apply two conceptually different methods for estimating the macroeconomic return to population health. 2011, Cervellati and Sunde 2011, 2012, Bloom et al. Acemoglu and Johnson 2007, Bleakley 2007, Weil 2007, Bleakley and Lange 2009, Aghion et al. Although many contributions in the literature document a positive relationship between population health and macroeconomic performance, the size of this return remains subject to debate (e.g. ![]()
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