Health as Human Capital: Synthesis and Extensions

This paper will present the resulting emerging theory of health as human capital. It builds on and integrates various contributions, but it adds to the literature by incorporating a few relevant ideas that have been ignored. The paper also refers to some of the evidence that demonstrates the empirical importance of health as human capital. This evidence covers general advances in health for the past several decades, and advances in treating a few specific diseases. There is a strong motivation for an interest in the economic value of improved life expectancy. It shows that life expectancy at birth hovered around 40 years in the 19th century, even in countries like the UK and the US that were among the very richest. Life expectancy improved only by a few years during that century, but really took off during the 20th century. Life expectancy at birth hit the mid-sixties by 1950, and was close to 80 years by the beginning of the 21st century. I believe the decline in mortality at all ages was among the most significant economic and social developments of the twentieth century.