Productivity effects of ill health and malnutrition: The Effects of Human Capital on Economic Development

Less research has been done on the returns to health and nutrition than on the returns to education.

This is partly because the non-monetary aspects of these returns - greater longevity, reduced suffering and absence of disability - are arguably more central than in the case of education. Attempts have been made to put financial values on these non-monetary outcomes, but the judgements involved are complex and subject to considerable controversy. More promising are attempts to assess the cost-effectiveness of various interventions in improving particular health indicators (see, for example, the analysis of costeffectiveness in terms of “disability life years” in the World Development Report, 1993). Here we consider some of the direct economic costs of ill-health in terms of reduced labour productivity. Possible indirect effects, in terms of lower investment in the quality of future labour, will be considered next.

Labour supply is adversely affected by illness in various ways. Most directly, days of work are lost when workers fall ill. Table 8 reports estimates of the cost of this using data from the Living Standards Measurement Surveys. On average, adult workers in the three African countries were ill for between 7% (in Mauritania) and 11% (in Ghana) of the 30 days prior to the surveys. Estimated income losses arising from absence due to illness range from around 5% in Côte d’Ivoire and Mauritania, to over 10% in Ghana. These losses are substantially higher than in the American countries for whom comparable figures are available.

These figures are probably underestimates, since they exclude a number of other important effects of ill-health. Often people may continue to work when ill, but with lower productivity. Healthy workers are likely to have to stop work to care for sick household members (particularly children). Invalidity and premature death may also substantially reduce labour supply. Low life expectancy and the risk of serious illness may reduce incentives to undertake longer term investments which might raise productivity.

There has been a large literature on the effects of nutritional status on labour productivity and wages. Behrman (1993) provides a recent review of the literature on two types of evidence. The first type of evidence is provided by data from socio-economic surveys which enable the association between measures of nutrition and worker productivity (or wages) to be investigated. One African study, Strauss (1986), studied the link between calorie intake and agricultural labour productivity in Sierra Leone.

Care was taken to control for the simultaneity of the relationship6. A one standard deviation increase in calories per equivalent adult was predicted to raise farm output by 20%, compared to the 33% impact of a one standard deviation in labour input. In a study of farm productivity in Ethiopia, Croppenstedt and Muller (1997), find a one standard deviation increase in the household head’s weight-for-height would increase output by 27%. The second kind of evidence is experimental: different groups of workers are given different kinds of nutritional supplement. One experiment gave Kenyan construction workers supplements of 1,000 calories per day. Since less food was consumed at home, this translated into an increase of 500 calories per day (a low-calorie supplement of 200 calories per day was almost completely offset by reduced consumption at home). Workers on the high-calorie supplement increased their productivity by 12.5% per day, a large increase (implying an output elasticity of 0.5 compared with the 0.33 estimated for Sierra Leone)7.

Human Capital and Economic Development Simon Appleton and Francis Teal To learn more about this author, visit African Development Bank's Website.

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