The Economics Of Social Determinants Of Health And Health Inequalities
THE ECONOMICS OF SOCIALDETERMINANTS OF HEALTHAND HEALTH INEQUALITIES:a resource book
THE ECONOMICS OF SOCIALDETERMINANTS OF HEALTHAND HEALTH INEQUALITIES:a resource book
WHO Library Cataloguing-in-Publication DataThe economics of the social determinants of health and health inequalities: a resource book.1.Socioeconomic factors. 2.Health care rationing. 3.Health status indicators. 4.Health status disparities.5.Social justice. I.World Health Organization.ISBN 978 92 4 154862 5(NLM classification: WA 525) World Health Organization 2013All rights reserved. Publications of the World Health Organization are available on the WHO web site (www.who.int) or can be purchased fromWHO Press, World Health Organization, 20 Avenue Appia, 1211 Geneva 27, Switzerland (tel.: 41 22 791 3264; fax: 41 22 791 4857;e-mail: bookorders@who.int).Requests for permission to reproduce or translate WHO publications –whether for sale or for non-commercial distribution–should be addressed to WHO Press through the WHO web site (www.who.int/about/licensing/copyright form/en/index.html).The designations employed and the presentation of the material in this publication do not imply the expression of any opinionwhatsoever on the part of the World Health Organization concerning the legal status of any country, territory, city or area orof its authorities, or concerning the delimitation of its frontiers or boundaries. Dotted lines on maps represent approximateborder lines for which there may not yet be full agreement.The mention of specific companies or of certain manufacturers’ products does not imply that they are endorsed or recommendedby the World Health Organization in preference to others of a similar nature that are not mentioned. Errors and omissionsexcepted, the names of proprietary products are distinguished by initial capital letters.All reasonable precautions have been taken by the World Health Organization to verify the information contained in thispublication. However, the published material is being distributed without warranty of any kind, either expressed or implied. Theresponsibility for the interpretation and use of the material lies with the reader. In no event shall the World Health Organizationbe liable for damages arising from its use.Photo credits: istockphoto.com/Robert Churchill (top); DFID - UK Department for International Development, creative commons(left); iStockphoto.com/Alida Vanni (right); Colectivo Ecologista Jalisco, creative commons (bottom).Design and layout by www.paprika-annecy.comPrinted in Luxembourg
BackgroundTIn 2012, the World Health Assembly passed resolution65.8, which endorsed the Rio Political Declaration onSocial Determinants of Health and emphasized theneed for “delivering equitable economic growth throughresolute action on social determinants of health acrossall sectors and at all levels”. Improving understandingof economic rationales for intersectoral policy andprogramme interventions is therefore an importantcomponent of work for countries implementing socialdeterminants of health recommendations. For this reason,Previous research has shown that increased attention to WHO launched the Economics of Social Determinantspolicies across sectors that improve health and health of Health project to describe and discuss the potentialequity requires better preparation with regard to knowledge for economic rationales to support the case for socialon the economic rationales for interventions, and how determinants of health interventions, and to summarizeintersectoral policies are developed and implemented. economic evidence in key public policy areas.he strong links between socioeconomic factors orpolicies and health were documented in the WorldHealth Organization (WHO) Commission on SocialDeterminants of Health report. Yet even when health andhealth equity are seen as important markers of development,expressing the benefits of social determinants of healthinterventions in health and health equity terms alone isnot always sufficiently persuasive in policy settings wherehealth is not a priority, or when trade-offs exist betweenhealth and other public policy objectives.III
AcknowledgementsThe main researchers constituting the ResearchTeam of the Economics of Social Determinants ofHealth project were Professor Marc Suhrcke, Ms.Carmen de Paz Nieves, Professor Richard Cookson, andDr. Lorenzo Rocco. Nicole Valentine (Ethics and SocialDeterminants of Health, WHO) was responsible for overallcoordination of the project, including collaboration withthe Mexican Task Force.The collaboration with the Mexican Task Force on the globalproject is gratefully acknowledged. In this regard, specificthanks go to Diego González, Philippe Lamy (formerly, WHORepresentative, Mexico Country Office); Adolfo MartínezValle, Alejandro Figueroa-Lara, Paulina Terrazas andGuadalupe López de Llergo from the Secretariat of Healthof Mexico, and Sofia Leticia Morales and Kira Fortunefrom WHO/PAHO. The collaboration of the coordinatingproject team members from the Public Health Agencyof Canada is also gratefully acknowledged, in particularJane Laishes, James McDonald and Andrea Long.The Global Task Force would also like to acknowledge withgratitude the discussions with WHO colleagues in internalWHO meetings in Geneva, and with experts who wereassembled by WHO at the meeting on the economics ofsocial determinants of health in October 2012. Experts atthe meeting included nominations from the WHO RegionalOffice for Africa, experts representing United Nationsagencies and experts from nongovernmental agencies.Health Systems Financing Department); Carlos Doraand Ivan Ivanov (Protection of the Human EnvironmentDepartment); Joe Kutzin and Saksena Prianka (HealthSystems Financing Department); Timo Ståhl (ChronicDiseases and Health Promotion Department); Eva Pascoal(WHO, Mozambique Country Office); Davison Munodawafa(WHO/AFRO); and Tiiu Sildva (WHO intern).The project team acknowledges with gratitude contributionsfrom the following individuals and institutions: MaggieDavies and Chris Brookes (Health Action PartnershipInternational); Felix Masiye (Department of Economics,University of Zambia); James Humuza (School of PublicHealth, Rwanda); Howard Friedman and Alanna Armitage(United Nations Population Fund); Brian Lutz and DouglasWebb (United Nations Development Programme); XeniaScheil-Adlung (International Labour Office) and ClaudiaRokx (World Bank).The external reviewers provided useful insights andcomments that are also gratefully acknowledged: Dr. AntonE. Kunst (University of Amsterdam) and Dr. Ajay Tandon(World Bank). Carmel Williams and Isobel Ludford (Healthin All Policies Unit, Government of South Australia) arealso thanked for their valuable contributions to messaging.The technical editing support of John Dawson is alsoacknowledged with gratitude.Any errors or omissions are the fault of the project teamSpecific thanks are extended to colleagues from WHO,alone.as follows: Rüdiger Krech and Eugenio Villar (Ethics andSocial Determinants Department); Dan Chisholm (Mental Funding for this project was provided in part by the PublicHealth and Substance Abuse Department; previously Health Agency of Canada.IV
ContentsExecutive summary. 01Background.01How do economists approach the assessment of economic motivation?.01Economic arguments for investment in the social determinants of health. 02Basic economic rationales. 02Value for money. 02Findings in specific public policy areas with implications for health. 02Research gaps. 04Chapter 1. Introduction. 051.1 Why this resource book?. 051.2 Using this resource book. 061.3 How were sectors chosen?. 08How are interventions classified?.081.4 1.4.1 Intersectoral public policy and action perspective . 091.4.2 Intervention evidence review orientation. 09References. 11Chapter 2. The economic argument for social determinants of healthand socially determined health inequalities. 132.1 Efficiency-based rationales for public policy intervention. 142.2 S tandard efficiency-based rationales. 162.2.1 Imperfect or asymmetric information. 162.2.2 Externalities. 162.2.3 Public goods. 192.2.4 Departures from rationality. 192.3 N on-standard economic rationales: behavioural economics.212.4 Equity-based rationale for public policy intervention. 222.5 T he relationship between efficiency and equity. 262.5.1 The standard viewpoint. 262.5.2 T he standard viewpoint: when is it less valid?. 262.5.3 T he macroeconomics viewpoint: traditional and new evidence. 27References. 30Chapter 3. Assessing value for money of interventions. 333.1 Valuing the consequences of social determinants of health interventions. 333.1.1 Valuing costs. 333.1.2 C ost–effectiveness and cost–utility analysis. 343.1.3 Cost–benefit analysis. 353.1.4 Conclusions .373.2 Valuing reductions in health inequities. 383.2.1 Valuing reductions in health inequities in cost–effectiveness analysis. 383.2.2 Valuing reductions in health inequities in cost–benefit analysis. 393.2.3 Conclusions . 393.3 Challenges in assessing the value for money of social determinants of health interventions.41References. 44V
Chapter 4. Can education policy act as health policy?. 474.1 Efficiency-based rationales. 474.1.1 Economic benefits of education and the presence of market failures . 474.1.2 Does education have an impact on health?. 484.1.3 Average impact of education interventions. 484.2 Equity-based rationales . 504.2.1 Equity aspects in education. 504.2.2 Equity impacts of interventions. 514.3 Value for money. 524.4 Conclusions. 54References. 64Chapter 5. Can social protection act as health policy?. 735.1 Efficiency-based rationales. 735.1.1 Economic benefits of social protection and the presence of market failures. 735.1.2 Does social protection have an impact on health?. 745.1.3 Average impact of social protection interventions. 745.2 Equity-based rationales . 765.2.1 Equity aspects in social protection . 765.2.2 Equity impacts of interventions. 775.3 Value for money. 775.4 Conclusions. 79References. 86Chapter 6. Can urban development, housing and transport policy act as health policy?. 936.1 Efficiency-based rationales. 936.1.1 Benefits of urban development, housing and transport infrastructure and the presenceof market failures. 936.1.2 Does urban development and infrastructure have an impact on health?. 946.1.3 Average impact of interventions . 956.2 Equity-based rationales. 976.2.1 Equity aspects in urban development, housing and transport. 976.2.2 Equity impacts of interventions. 986.3 Value for money. 996.4 Conclusions. 101References. 109Annex A. Looking beyond GDP: broader measures of well-being, welfare and prosperity.115References.116Annex B. Commission on Social Determinants of Health recommendations.119Annex C. Literature review: methodology. 123VI
The economics of the social determinants of health and health inequalities: a resource bookBoxesBox 1.1 Summary of sectors prioritized by CSDH. 08Box 2.1 The use of cost of health inequality evidence. 13Box 2.2 Economic evaluation studies answer questions relative to specific actions. 14Box 2.3 Examples of information imperfections .17Box 2.4 Examples of externalities . 18Box 4.1 From resource- to incentive-based interventions in higher education in the United States. 50Box 4.2 Calculating the costs and benefits of early childhood education. 53Box 6.1 Urban HEART.101Box C.1 Screening criteria. 123FiguresFigure 1.1 Overview of resource book information.07Figure 1.2 Types of interventions. 09Figure 1.3 Analytical framework. 10Figure 2.1 Relationships between different dimensions of inequality. 23TablesTable 2.1 Preferences on income equality. 25Table 2.2 Importance of eliminating big income inequalities. 25Table 3.1 Potential approaches to incorporate equity considerations into economic evaluations of socialdeterminants of health interventions. 40Table 4.1 Education interventions: summary of health, economic and equity impacts. 56Table 5.1 Social protection interventions: summary of health, economic and equity impacts.81Table 6.1 Urban development, housing and transport interventions: summary of health, economic and equityimpacts. 103VII
Executive summaryBackgroundIHow do economists approachthe assessment of economicmotivation?n 2000, the World Health Organization (WHO)acknowledged the need to further explore the relationshipbetween health and the economy by setting up theCommission on Macroeconomics and Health (CMH). One There are two fundamental components of the economicof the main conclusions of the work of CMH was that argument:investing in health could not only be of intrinsic valuebut could in addition produce important economic gains. Establishing the basic rationale for public policyintervention. Establishing the basic rationale for publicIn response to the growing concern about equity issuespolicy intervention is needed because to economistsand their implications for overall development, WHOpublic intervention is typically only an afterthought thatapplies if – and only if – the market fails to “work well”established the Commission on Social Determinants ofin delivering satisfactory outcomes on average (theHealth (CSDH) in 2005, which focused on the “socialefficiency-based rationale) or in terms of the distributionjustice” or human rights arguments for health investments.of the outcomes (the equity-based rationale).CSDH investigated the factors involved in the so-called“social gradient in health”, which refers to the large Assessing whether the intervention representsobservable differences in health outcomes within andgood “value for money”. In order to mobilizebetween countries that are determined by avoidableinvestment in social determinants of health interventions,inequalities in the access to resources and power.there is a need to establish the value for money ofthose interventions. However, the value for moneyCSDH aimed to further investigate the causes of healthof social determinants of health interventions mayinequities, with a deliberate detachment from economicnot be apparent, for several reasons: health impactsconsiderations, and provide advice on how to tackle themmay not be fully (or at all) recognized in cost–benefiteffectively. CSDH also reviewed evidence for action on aanalyses; where compelling evidence of the benefitswider scope of interventions than CMH, many of whichof social determinants of health interventions doesrequire intersectoral collaboration or advocacy.exist, policy-makers in both the health sector andWith CMH and CSDH having adopted different but perhapsother sectors may not be aware of it; and this lackcomplementary standpoints, it soon became clear thatof knowledge may prevent public health advocatesgreater synergies had to be forged between the two. Thisfrom pointing out positive practices in other sectorsWHO resource book on the economics of social determinantsor from recommending policy health lenses or audits.Knowing the benefits of particular policy interventionsof health and health inequalities seeks to begin to build awill therefore help the health sector to lend supportbridge between the two approaches by explaining, illustratingto policies in other sectors that strengthen theand discussing the economic arguments that could (anddeterminants of health. To this end, exchange ofcould not) be put forth to support the case for investingknowledge and disciplinary openness is part of thein the social determinants of health on average and in thegrowingpractice of Health in All Policies and can helpreduction in socially determined health inequalities. Theto establish or cement clear synergies between policiesresource book has two main objectives:where they exist, or reveal tensions where they do not. to provide an overview and introduction into howeconomists would approach the assessment of theeconomic motivation to invest in the social determinants ofhealth and socially determined health inequities, includingwhat the major challenges are in this assessment; t o illustrate the extent to which an economic argumentcan be made in favour of investment in three majorsocial determinants of health areas: education, socialprotection, and urban development and infrastructure.01
Economic arguments forinvestment in the socialdeterminants of healthBasic economic rationalesTo the economist, social determinants of healthinterventions can be justified both on efficiency andequity grounds. Traditional welfare economics makesa conceptual distinction between the two, but recentthinking and evidence is forging a closer, synergisticlink between them. Government interventions on socialdeterminants of health may be justified from an efficiencyperspective in instances of “market failure”, when the freemarket fails to allocate resources efficiently, for exampledue to imperfect information, existence of externalities,provision of public goods or non-rational behaviour. Allof these elements of market failure are of relevance tothe social determinants of health.economists will (understandably) want to find the leastcostly strategy to reach that goal. The income distributionobtained through the workings of the market might notbe the one that maximizes social welfare. In other words,the social preference for equity might be different to theone produced by the market.In more than a few cases (for example early childdevelopment) efficiency and equity have been shown tohave the potential to mutually enhance each other. In thiscase policy-makers do not face the dilemma of havingto choose between them; instead, they can have thebest of both worlds, thereby maximizing their chancesof support from across the political spectrum.Value for moneyAs mentioned above, there is a need to establish the valuefor money of social determinants of health interventions.This is particularly important where policies and practicesin other sectors are not aligned with positive impactsAt the same time, achieving the goal of equity is considered on determinants of health and there may be argumentsan important economic justification for public policy, even against this alignment. Economic evaluation evidencethough it is harder to operationalize and more value laden does exist for social determinants of health interventions,than the efficiency rationale. Equity refers to a distribution but comes in very different shapes and sizes. However,of outcomes that is based on some notion or principle of most cost–benefit studies in policy areas related to thejustice. Equity does not necessarily and naturally improve social determinants of health fail to capture the healthas overall outcomes do, hence the potential need and effects. Hence, there is a need to consider those effects(and provide credible evidence for them), as they mayjustification for public intervention.alter the prioritization decisions that would otherwise beA concept of justice that is currently widely accepted based on understated returns of investment. While thisamong economists (and beyond) is that of substantive sounds straightforward in theory, it encounters a numberequality of opportunity – the idea that individuals should of challenges in practice, in particular when it comeshave the same opportunity to achieve outcomes such as to attribution of the changes in health outcomes to thehigh income or a long life, but do not necessarily need intervention in question, the valuation of the potentiallyto achieve the same outcomes due to freedom of choice. multifaceted benefits of the intervention, and incorporationDespite the widespread acceptance of the concept, andof distributional effects into the economic evaluation.the obvious relevance for arguments supporting the needto tackle health inequities, challenges remain in termsof precisely measuring the concept.Recent economic thinking and evidence is forging a closer,synergistic link between efficiency and equity. The ideaof a trade-off between equality and efficiency is likelyto have been overemphasized. In reality, neoclassicaleconomics indicates that redistribution does have aprice, but sometimes this price is worth paying. If thereis a political decision to pay the price, neoclassical02Findings in specific publicpolicy areas with implicationsfor healthThe resource book reviews and discusses the existingevidence in three major areas of social determinantsof health: education, social protection, and urbandevelopment, housing and transport infrastructure (for
The economics of the social determinants of health and health inequalities: a resource bookbrevity, urban development and infrastructure). In eachof these areas, there are important market failuresthat can in principle justify public policy interventions.For instance, credit markets providing loans to financeeducation might fail as creditors cannot observe theacademic ability of the debtor and, hence, the student’sprobability of graduating, and they cannot prevent thedebtor from opportunistically reneging on his or herobligation. The economic external benefits of educationaccrue (for instance) to work teams whose productivityincreases due to the interaction among more educatedpeople. Non-economic be
Team of the Economics of Social Determinants of Health project were Professor Marc Suhrcke, Ms. Carmen de Paz Nieves, Professor Richard Cookson, and Dr. Lorenzo Rocco. Nicole Valentine (Ethics and Social Determinants of Health, WHO) was responsible for overall coordination of the project, including collaboration with the Mexican Task Force.
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