Why "health" matters to the "economy". An economy with well-being at the heart.

11 February 2020

Why 'health' matters to the 'economy'. An economy with well-being at the heart. 


1. Lines of argument

Health / wealth = Two way relationship

Economic prosperity AND health & well being are BOTH mission critical for the city. This section sets out why. 

The economy is everything, everything is connected.

The economy is not just about the activities of private sector business.

Investments in both public sector, voluntary sector and the actions of individuals all contribute to outcomes we individually and collectively value and thus what we consider “the economy”. Sometimes measurement and valuation is difficult, but that doesn’t make it less important. Everything is connected.

Healthy Life expectancy as an economic issue

Nationally (and Sheffield) HLE = 60. Thus 7 yrs of less than good health whilst working age.

How healthy we are / not has critical implications on how actuaries advice govt re retirement age


There is deep inequality in the distribution of illness. It is an economic productivity issue, as well as intrinsically bad

There’s a 25y gap in healthy life expectancy (HLE). Age of onset – 45 v 70 before multiple conditions become an issue. A baby born in Darnall can expect to get to 50 in good health, a baby born in Fulwood can expect to get to 70 in good health.

The inequality in health outcomes is also intrinsically linked to inequality in economic outcomes.

Many people and organizations have commented that the way in which the economy has developed has left people behind, often exacerbated poverty. There is a strong research base on this, and this has led to the establishment of terms like “inclusive economy”, which describes an effort to ensure the economy works for everyone. Given that health inequality is essentially driven by wealth inequality this underscores the importance of our efforts around creating an inclusive economy as important for inequalities in health and well being.

Impact of illness on Sheffield Economy

Estimates that illness costs Sheffield economy £1bn (as a comparator, NHS spend = £1.1bn). 100k working days lost a year to mental illness (under estimate??). MSK similar?

Some specifics – Heart attack, cancer, stroke

something most commonly associated with age is very common in <65s than older. Many people loose significant function and don’t come back to work.

Multi morbidity

More common in working age than old. See Barnett, Lancet 2012 and plenty of local level analysis

Multi morbidity (having more than one condition) is more common than having a single illness.

There are more working age people than the elderly with multi morbidity and this is very unequally spread across our population. Thus underscores the importance of the health of the working age population. As > 50% of over 60s have 2 or more LTC this makes prevention and delaying and treating those LTC a QOL and economic issue

Put most simply, poor health, which is quantifiable, has an impact on economic growth. And investment in better health can have an impact on economic growth.

Simply, a healthier population is likely to be more economically productive (and to need less spending on healthcare and health-related benefits). This is a two way link, a more prosperous society is likely to be healthier. Just as HS2 is seen as an investment in the economy, so is investment in a healthy population. 

We should consider health as a balance sheet asset, not a cost. 

Measures of economic progress

What we measure and value is important, this is one of the things that underpins calls to widen the measure of economic growth from solely GVA to a wider measure that includes social benefit. It would be easy, in narrative terms at least, to also include resilience and cohesion into the things we value in our economy.

Health and well-being as a central component of economic strategy

The above issues are not issues that will be (only) solved by more, or better health care services. That is necessary but not sufficient

Poor health has a direct and indirect impact on economy at individual and societal level

Thus the central “health” challenge – stalling healthy life expectancy, and inequalities of that – aren’t a “problem” for the NHS, they are a problem for the whole economy.

Keeping people well is thus a major national infrastructure project. A bit like HS2. With those kind of timeframes. How seriously are we really taking this.

This is the reason why health and well being should be a central component of economic strategy.

2. Some references to support the above: 

1)            My own DPH report 2018

my DPH report  set out an argument why economy and health go hand in hand and how LAs can bring wealth and health together https://t.co/SZEaYoJMks

2)            NHSA report

The Northern Health Sciences Alliance have also recently published detailed analysis on the connection between poor health and productivity

reducing the number of working aged people with limiting long term health conditions by 10% would decrease rates of economic inactivity by 3 percentage points in the Northern Powerhouse.

30% of the gap in productivity between north and south is attributed to a HEALTH gap, not skills / education / transport other.

3)            CMO report 2018

The 2018 Chief Medical Officer for England annual report

6% of healthy men are out of work; 25% of those with a longstanding illness.

28% of the sick are in poverty and those with less education educated are far more likely to be ill and on sickness/disability benefits than those with the highest levels of education.

half of those in incapacity benefits have a mental health problem.

4)          Health Foundation blog on data on time spent in good health

People in the most deprived areas of England spend less time in good health

Reproduced here nearly in full as it is so good. 

Analysis of 2011 Census data shows that while the proportion of people reporting good health declines with age, this decline begins at younger ages in the most deprived parts of England. By the time they reach age 55-59, only 50% of people living in the most deprived local areas report good health. In contrast, in the least deprived areas, 85% of people in this age bracket still report good health. In these areas, the share of people reporting good health doesn’t drop to 50% until age 75-79 – a whole 20 years later.

Periods of poor health may occur at any age, including working age. This occurs most often for those in the most deprived areas.

This chart not only shows how the share of the population reporting good health deteriorates as people age, but also indicates that actions to improve health should occur across the life course. Only 50% of people living in the most deprived 10% of local areas in England report good health by age 55–59. In the 10% least deprived of local areas the same proportion report poor health a whole 20 years later, at ages 75–79. This is of concern as having an unhealthier working age population may negatively affect an area’s productivity.

5)            Quote from BMJ from Jo Bibby and Adam Briggs

……..If people’s health is treated as an expendable that can be sacrificed when required to promote other government interests, the treasury will find it harder to deliver on some of its own economic measures of success.

Maintaining and improving people’s health is essential to ensuring that they can participate in the labour market.

Middleton – Time to put health at the heart of all policy making. BMJ

Inequalities in health cost £65bn (€74bn; $83bn) in lost productivity and taxes and increased benefits payments plus £5.5bn for direct NHS treatment in 2010. From Marmot review

6)            Poor health is now the single biggest reason for economic inactivity

See ONS Economic inactivity by reason (seasonally adjusted data

7)            Health related labour market exit

We KNOW significant numbers leaving labour market early. And that this is unequally distributed

And thus productivity gap issues (also commented on in NHSA report, and chief med officer annual report)

See this study from Holman recently on the extent to which different chronic conditions are risk factors for disability-related employment exit. It analyzed the extent to which associated symptoms and limitations, such as muscle use limitations, pain and mobility are risk factors

Key points

Increasing life expectancy has led governments to implement reforms aimed at delaying retirement.

Chronic conditions are an important barrier to this given their association with pain, functional limitations, depression and ultimately lower life expectancy.

Data from waves 1 to 8 of the English Longitudinal Study of Ageing. 

Alan Walker and Daniel Holman blog on this was excellent in summarizing the key points from the perspective of the HLE challenge.

Each year tens of thousands of older workers in England leave employment prematurely due to poor health and disability.

What’s striking, and supported by previous research, is the significant proportion of employment exits that arthritis and depression account for.

Furthermore, large numbers of people are leaving work because they have limitations in use of their muscles, and experience pain and mobility problems.

There are significant gains to be had by focussing on chronic conditions, disability and employment exit, and the possibility to address gender inequality in the process. Although more work is needed to fully tackle the issues, there is already enough evidence to make major advances on workplace well-being and age management.

To do so would greatly advance the extending working lives policy goal as well as improving the well-being of hundreds and thousands of older workers.

For every 8m people stay in work GDP increases by 1% (needs ref!).

9              Link between life expectancy and GDP

See Swift

A similar, long run, cointegrating relationship between life expectancy and both total GDP and GDP per capita was found for all the countries estimated.

A 1% increase in life expectancy resulting in an average 6% increase in total GDP in the long run, and 5% increase in GDP per capita.

This is underplayed in economic policy. It is also likely significantly underplayed in the estimation of correlation. Given what we know about healthy life expectancy, it is not unreasonably to think that the impact of HLE on GDP would be greater than LE

Total GDP and GDP per capita also have a significant influence on life expectancy for most countries. There is no evidence of changes in the relationships for any country over the periods estimated, indicating that shifts in the major causes of illness and death over time do not appear to have influenced the link between health and economic growth.

10)          Population health as pathway to economic development (again, nearly in full below because it is SO good)

I’d like to take this concept another step—or leap—forward. It’s important but it’s not enough to understand the impacts on health when we’re making decisions about jobs, transit, crime, social services, housing, etc.

It’s time to also consider the impacts from health in these sectors. In other words, investments in evidence-based health interventions can be expected to yield enormous community and economic benefits, and we ought to be paying more attention to that.

For example, suppose you want to improve lifetime earnings. A typical response would be to invest directly in education or job training (and those are good things). But, what about investing in infrastructure that reduces lead poisoning? Children with high lead levels in their blood are more likely to require special education, have lower IQs and ADHD, and be involved in crime. They are less likely to be ready to start school and to graduate from high school. A 2009 Environmental Health Perspectives Journal article investigated the costs and benefits of lead hazard control for children under the age of six and found that, for every dollar spent on lead hazard control, $11-$227 were returned in benefits. The vast majority of these benefits accrued in the form of higher lifetime earnings and associated tax revenues, but the financial benefits also reduced costs in a variety of sectors, including special education, health care, and criminal justice. Now that’s community and economic development!

Once we start to treat health as a linchpin to community and economic development, we can begin to insist on different investment decisions and improve our programmatic approaches to power boost results. What could we be asserting to make this point of view more commonly understood? Here are three ideas:

  1. Health is an economic engine.

A series of 2008 symposium papers, entitled Health And Economic Development: Reframing The Pathway, argued for viewing “health as an economic engine” in which “improving economic conditions to improve health, and improving health to improve economic conditions, leads to the possibility of ‘virtuous cycles’.” They went on to conclude that as the cycles continue, there are ever-improving health and economic conditions. Interestingly, some of the authors,  David Mirvis and  Joy Clay, further posited that “a health intervention…maybe a necessary precursor or parallel to economic interventions. The success of an economic intervention may be dependent upon the health of the population, as an unhealthy workforce may be unable to support the needs of an economic industrial stimulus.”

This case for health as an economic engine seems fairly obvious when it comes to personal wealth and business profits, as demonstrated in these stats:

  • One additional chronic disease at age 16 is associated with a 5% reduction in the probability of employment at age 42.
  • Raising the average birth weight of low birth weight babies to the mean birth weight of all U.S. babies increases their lifetime earnings an estimated 26%.
  • The overall economic impact of absenteeism and presenteeism (working while sick) from common chronic diseases exceeded $1 trillion in 2003, and may reach $5.7 trillion by 2030.

Finally, it appears that health spurs economic growth through a variety of macroeconomic factors, such as increasing savings rates and foreign investment, improving social structures and community cohesion, and altering the long-term demographics of a population.  One study that looked at 13 developed countries found that a 1% increase in life expectancy resulted in an average 6% increase in total GDP in the long run, and a 5% increase in GDP per capita.  Another study concluded, “good health has a positive, sizable, and statistically significant effect on aggregate output.”

  1. Population health investments can spur jobs, earnings, and fiscal soundness.

A few months ago, I was poking around one of my favorite websites, the Washington State Institute for Public Policy. From its cost-benefit data, I constructed a portfolio[3] of various interventions related to population health. I simply chose a mix of population health interventions, from clinical to school-based to community-based. The returns from this portfolio are shown in the two graphs below (see the footnote for detail on all those acronyms):

Did I cherry pick the interventions? Of course I did! Why would one invest in the lowest return stocks in the stock market? But go to the website, and you’ll see that there are plenty of other high return investments.

  1. Key investments we currently make in economic development are under performing.

Business tax incentives aimed directly at job creation as well as business retention and expansion–often administered through enterprise/empowerment zone type programs–are a ubiquitous instrument of economic development. In a just released paper, the  Upjohn Institute estimated that, nationally, state and local tax breaks for business incentives total $45 billion, yet “incentives do not have a large correlation with a state’s current or past unemployment or income levels, or with its future economic growth.”

The  Federal Reserve Bank of San Francisco wrote in its March 2015 Economic Letter: “Our overall view of the evidence is that state enterprise zone programs have generally not been effective at creating jobs. Moreover, even if there is job creation, it is hard to make the case that enterprise zones have furthered distributional goals of reducing poverty in the zones, and it is likely that they have generated benefits for real estate owners, who are not the intended beneficiaries.”

These general findings are echoed in study after study at the state level.

  • An  independent evaluation of New Jersey’s Urban Enterprise Zone (UEZ) program found that, from 2002 to 2008, the state invested a total of $276.6 million but received only $0.08 in state and municipal tax revenues in return and $0.83 of “ripple” effects on the economy (i.e., net negative returns). And all 37 UEZ municipalities were in the bottom 10% of distressed cities according to New Jersey’s 2007 Municipal Revitalization Index.
  • The  California auditor found, “We could not determine whether the $1.5 billion of foregone revenue related to a research and development (R&D) credit in fiscal year 2012-13 is fulfilling its purpose or benefitting the state economy.”
  • In a  review of business incentives in New York state, evaluators wrote: “In the 2013 tax year, New York State provided an estimated $1.7 billion in 50 business tax credits to encourage taxpayers to engage in specific activities. . .There is, however, no conclusive evidence from research studies conducted since the mid-1950s to show that business tax incentives have an impact on net economic gains to the states above and beyond the level that would have been attained absent the incentives.”

Why would we spend our money this way? If our personal investment portfolios had such mixed results, I don’t think we’d hesitate to pick new stocks. It’s incumbent on us to be optimizing our public investments as well.

In fairness, many states– Maine and New Jersey, for example–are beginning to evaluate and call for reform of their business tax incentive programs. As best I can tell, however, there remains no wholesale rethinking of the general approach. We have to ask ourselves: are business tax credits for job creation the best way to increase jobs and therefore the income of residents in a community?

Maybe offering business tax credits for creating health (a la Mirvis and Clay) would be a higher yield approach. For example, suppose the portfolio mix I used to generate the graphs was the right mix for New York State, and further suppose that New York spent about half of its tax credits ($800 million) on this portfolio, and that the yield was only half what the evidence projects. In this scenario, taxpayers would see a yield of more than $3.6 billion, and participants would reap another $4.5 billion of benefits, mostly in the form of higher labor earnings.

No doubt this is an overly simplistic calculation—variables such as effect size and dosage, differences in costs/taxes between New York and Washington, and potential interactions across interventions would need to be taken into account for a proper analysis. But the point is that, even if we cut returns in half from what the evidence suggests, we still have some very healthy yields—very healthy compared to current investments. And that is an ROI worth some serious. 


Greg Fell is the Director of Public Health at Sheffield City Council.