Health will remain as important in the updated GCI as it is in the current GCI. The availability of new indicators could lead to improvements in the measurement of the health status of the population, especially with respect to non-communicable diseases.
According to the World Health Organization’s definition, health is a state of complete physical, mental, and social well-being, not merely the absence of disease or infirmity.44
It is commonly understood that higher income typically leads to better health, for example by enabling a country to afford better nutrition, sanitation, and healthcare services. A substantial body of research now points to causality also flowing in the other direction: better health leads to higher income by improving productivity.45 A healthy workforce forms the backbone of economic activity.
Better health directly affects productivity in two main ways. First, healthy workers have the physical and mental energy to perform better.46 Second, they are less likely to take time off work as a result of illness (either because of their own illness or to take care of a sick family member). In that sense, productivity can be affected by the health not only of the current workforce but also that of the population as a whole.
We intend to capture the impact on productivity of two broad categories: non-communicable diseases and communicable diseases. Communicable diseases such as HIV, malaria, and tuberculosis drag down productivity because infected workers are weaker and tend to be more often absent from work than healthy workers.47 However, the global disease burden is shifting from communicable to non-communicable diseases such as cardiovascular diseases, cancers, chronic respiratory diseases, and diabetes.48 These are of growing concern because they reduce the quality and quantity of the labor force and therefore negatively impact productivity.49
In addition to the two direct channels described above, there are three main indirect ways in which better health translates into greater productivity, with effects becoming apparent only in the medium to long run. First, healthy children tend to attend school more regularly, stay in school for longer, and develop higher levels of cognitive ability, thus improving the overall level of education of the future workforce. The importance of education for productivity is described further below.
Second, healthier individuals live longer, and individuals with longer life expectancies are likely to invest more in building their human capital through education because they can expect higher returns on their investment. And third, healthier individuals are likely to spend less on medical expenses, enabling them to save more. With a longer life expectancy, an individual may be motivated to save more for retirement. This will increase the amounts available to fund investments; investments that businesses are also more likely to make when they know they can rely on a healthy workforce.