H N P D I S C U S S I O N P A P E R The Economic Benefits of Investing in Child Health Paolo C. Belli and Olivier Appaix May 2003 The Economic Benefits of Investing in Child Health Paolo C. Belli Olivier Appaix May 2003 Health, Nutrition, and Population Discussion Paper This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank's Human Development Network (HNP Discussion Paper). The papers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Citation and use of material presented in this series should take into account this provisional charac- ter. 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Preker (apreker@worldbank.org). For information regarding this and other World Bank publications, please contact the HNP Advisory Services at healthpop@worldbank.org (email), 202-473-2256 (telephone), or 202-522-3234 (fax). ISBN 1-932126-73-2 © 2003 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. ii Health, Nutrition, and Population Discussion Paper The Economic Benefits of Investing in Child Health Paolo C. Belli,a and Olivier Appaixb a Health Economist, The World Bank, SAS-Human Development b Health and development socioeconomist, Cambridge, Massachusetts, USA Paper prepared for the Expert Meeting on Assessing the Economic Benefits of Investing in Youth in Developing Countries, October 15, 2002, Washington, D.C., organized by the Committee on Population of the National Academies and the World Bank. Abstract: This paper presents a survey of the theory and the evidence on the economic impact of investing in child health. It shows that investing in the health of children is justified not only because it fulfills a basic human right, but also because it is an investment with high social and private returns. A central theme of this paper is that the relationship that links child health with economically relevant dimensions is circular--poverty contributes to disease, and poor health contributes to perpetuating poverty. The available evidence shows that almost 11 million children die every year from largely preventable diseases, and it unveils what the principal determinants of child illness are. The vast majority of children who die belong to the more disadvantaged socioeconomic groups within each country. Furthermore, the literature identifies several interventions and programs that could significantly contribute to improved child health, particularly in the areas of nutrition, communicable disease prevention and control, and education. We intuitively understand that there is a huge potential for largely positive social and economic returns on child health investments. Yet quantitative estima- tion of these benefits is still at an early stage. First, the association between health interventions and their social and economic consequences is multidimensional and complex. Second, the return on investment is measurable only over the long term. Third, the return is not automatic, and its magnitude is highly context-specific. For these reasons, few studies, mostly in the area of nutrition or of immunization services, have attempted to develop a full cost-benefit analysis, or to provide a quantitative measure of the benefits attainable by investing in child health. Instead, most empirical studies have focused on one of the several potential intermediate benefits of investing in child health, such as improved cognitive ability, increased school participation and attainment, and the induced demographic changes, which can be measured with greater precision. Keywords: Child Health, Economic Impact, Health and Education, Demographic Transition Disclaimer: The findings, interpretations, and conclusions expressed in the paper are entirely those of the authors, and do not represent the views of the World Bank, its Executive Directors, or the countries they represent. Correspondence details; Paolo C. Belli, 202-458-0020 (telephone), 202-522-2955 (fax), pbelli1@worldbank.org (email); Olivier Appaix, 617-661-6679 (telephone and fax), Olivierappaix@cs.com (email). iii Contents Foreword .................................................................................................................... vii Acknowledgments..........................................................................................................ix Acronyms ....................................................................................................................xi Introduction.................................................................................................................. 1 I. The Relationship between Health and Economic Development............................................ 3 II. Children's Health in the Development Cycle .................................................................... 7 Estimating the Burden of Disease for Children ................................................................................ 8 Identifying the Determinants of Ill Health ....................................................................................... 9 Secondary Consequences of Child Illness ....................................................................................... 11 III. Correcting Children's Impaired Health and Development.................................................. 15 IV. Potential Economic Benefits from Child Health Investments .............................................. 17 The Impact of Better Health for Children: The Evidence............................................................... 18 V. Analyzing Economic Benefits of Investments in Child Health: Limitations and Potential ........... 27 Disentangling the Complex Web of Co-Determinants ................................................................... 28 A Multiplicity of Benefits .............................................................................................................. 28 Hidden Costs ................................................................................................................................ 30 Conclusion ................................................................................................................. 33 Bibliography ............................................................................................................... 35 Annexes .................................................................................................................... 45 Annex 1. Strategy for Literature Search .......................................................................................... 46 Annex 2. Identifying the Determinants of Ill Health ...................................................................... 47 Annex 3. Preventive and Curative Interventions to Improve Child Health...................................... 52 Annex 4. Economic Analysis of Integrated Programs...................................................................... 57 Boxes Box 1. The Link between Health and Learning Capacity in Children .................................................. 11 Box 2. Main Interventions and Programs to Reduce Infant and Child Mortality and Morbidity........... 16 v The Economic Benefits of Investing in Child Health Figures Figure 1. The Life-Cycle Approach to Defining Health ..............................................................7 Figure 2. Major Causes of Mortality among Children under Five in All Developing Countries ...8 Figure 3. Underlying and Proximate Determinants of Health .....................................................9 Figure 4. The Health Development Cycle I ..............................................................................12 Figure 5. The Health Development Cycle II.............................................................................13 Figure 6. Channels through which Child Health Interventions Affect the Economy..................17 Figure 7. Impact of a De-Worming Program on School Attendance in Kenya ...........................19 Figure 8. Channels through which Illness Reduces Income........................................................25 Tables Table 1. Intra-Country Disparities in Infant Mortality.............................................................10 Table 2. Intra-Country Disparities in Under-Five Mortality .....................................................10 Table 3. Increase in Net Present Value (NPV) of Productivity Due to Improved Social Indicators Resulting from ICD Programs...................................................................24 Table 4. Benefits of ECCD (or ECD) Programs......................................................................29 Table 5. Summary of Costs and Benefits of Interventions and Programs Impacting Children's Health and Development (Physical, Mental, and Social) ............................................31 vi Foreword T he authors of this Discussion Paper make tion and population policies are now, also, recog- a valuable contribution to our nized as important contributors to economic understanding of the role of health, growth and development. And poor policies in nutrition and population as determinants of these areas are often associated with poor economic economic growth and development. Beyond performance. basic rights arguments, the investment in child Good health contributes to improved growth health has important social returns such as and development in the following ways: future productivity of the workforce, and is one of the most effective instruments in the fight · Nutrition affects labor productivity and growth against poverty. · Fertility and population dynamics affect growth Although the topic has been hotly debated · Child health and youth health affect growth since Adam Smith's Wealth of Nations, the determi- Poor health and unhealthy habits reduce nants of economic growth and prosperity are still economic growth and development in several ways not fully understood. Why have some regions (Hammoudi 1999): experienced rapid economic growth and develop- · HIV/AIDS, malaria, and tuberculosis (TB) lower ment during the past decade (Latin America and labor productivity, growth and household the East Asia and Pacific region), while others have incomes stagnated or experienced negative growth, leaving a large part of their population in poverty (Sub- · Tobacco use adds an economic burden on Sahara Africa, South Asia, and Central Asian households Republics)? What role do globalization and inter- · Disability in most cases contribute to earnings national aid play in all of this? loss and unemployment Overall, the number of people throughout the · Treating diseases and the needed health care world living in absolute poverty (defined as having systems are expensive an income of less than US$1 a day) has fallen by an The paper by Belli and Appaix explores the estimated of 200 million since 1980. This situa- economic benefits of investing in child health, tion may deteriorate during the next 12 to 18 describes the pathways from improved health months due to the sluggish global economic towards economic growth, and summarizes the outlook. According to recent forecasts, global GDP available evidences in a compelling fashion. A is expected to rise by only 2.5 percent annually. central theme of this Discussion Paper is that High-income countries are expected to grow at poverty contributes to diseases of children and that about 2.1 percent in 2003, while developing ones poor health of children perpetuates poverty when will grow at 3.9 percent. these children grow up. Thus, the notion of a Factors contributing to economic growth and vicious life cycle that underpins our understanding prosperity include policies and institutions that of the links between child health and economic foster good governance, private sector investment, development. trade liberalization, natural resource conservation, Almost 11 million children die every year from basic education, and health. Good health, nutri- largely preventable diseases. The vast majority of vii The Economic Benefits of Investing in Child Health these children live in low-income countries, and In addition, current investments in child health belong to disadvantaged social groups. This creates are not easy to measure. Despite repeated attempts, a heavy social burden on their families and entails the Bellagio group was unable to track investments serious economic and social costs in terms of lost of on child survival over the past decade. Few develop- human capital and future productive capacity. Part ment cooperation agencies or countries track child of the reason these costs are difficult to document survival funding levels--most are unable to disen- is that they accrue over long periods of time and tangle funds for child survival from their overall are difficult to observe directly. investments in health. We hope this Discussion paper will stimulate further understanding from Although cost-effective interventions and policy makers and finance ministers on the impor- programs to improve child health are known and tance of investments in child health and will available, the coverage of those interventions is still contribute to the improvement of children lives. very low in the countries most needed. As de- scribed in the June 2003 Lancet series on child Readers are encouraged to provide feedback to mortality, the coverage is also very different across the authors and the World Bank on other ways that socio-economic groups, and poor children are most health, nutrition and population policy contribute disadvantaged. to overall human welfare and economic development. Alexander S. Preker Chief Editor HNP Publications World Bank Flavia Bustreo Senior Public Health Specialist WHO seconded Health, Nutrition and Population (HNP) World Bank viii Acknowledgments A n earlier version of this paper was presented In addition, the authors would like to thank during the "Expert Meeting on Assessing Flavia Bustreo for her valuable inputs in the paper the Economic Benefits of Investing in conception and structure, Rosemarie Phillips for Youth in Developing Countries", October 15, her excellent editorial work, Charito Hain for her 2002, Washington, D.C., organized by the relentless contribution to the research project, Nita Committee on Population of The National Congress, Kathy Strauss, Gisele Biyoo, and Henrik Academies and the World Bank. Valuable criticisms Axelsson for their expert production of the final and comments were received in particular by the volume. discussants, Mayra Buvinic, Jacques van der Gaag, The research for this work was supported by the and Alex Preker, but also by several participants to Italian Trust Fund. the meeting. ix Acronyms AIDS Acquired Immunodeficiency Syndrome HIV Human Immunodeficiency Virus ARI Acute Respiratory Infections ICD Integrated Child Development BMI Body Mass Index IMCI Integrated Management of Childhood Illness CMH Commission on Macroeconomics and Health (WHO) IMPB Integrated Management of Pregnancy and Birth CREN Centre de Récupération et d'Education Nutritionnelle IQ Intelligence Quotient DALY Disability-Adjusted Life Year NPV Net Present Value ECD Early Childhood Development PFP Population and Family Planning ECCD Early Child Care and Development SES Socioeconomic Status EPI Expanded Program on Immunization TB Tuberculosis GDP Gross Domestic Product UNICEF United Nations Children's Fund GNP Gross National Product WHO World Health Organization xi Introduction C hildhood is a critical moment in the high benefit/cost ratio, as child health interventions development of human beings and currently undertaken probably are, does not by itself consequently of societies. Safeguarding the justify public involvement in its funding and/or best conditions for such development is, in the provision. Cost-effectiveness or cost-benefit measures longer term, the basis for a more productive and are useful criteria to compare alternative interventions socially integrated adult individual. once it has been decided that the government should provide/subsidize them because their benefits are This paper argues that investing in child health, worth social protection, because they correct market besides the moral premises that justify it, is a sound failures, because they are pro-poor, or, as argued economic decision for governments to take. The link above, because they fulfill a human right. Cost- between economic growth and health expenditure is effectiveness criteria should not be used to compare often underestimated, and this leads governments to different kinds of services of different nature or to grossly underestimate the potential economic benefits decide which ones the government ought to provide/ of investments in child health. subsidize in the first place.2 Existing economic evaluation studies for the most A convincing economic argument should show part have relied upon cost-effectiveness and cost/ that child health investments have benefits beyond benefit analysis, and have showed that child health those that private individuals would spontaneously interventions can produce a significant impact and an seize or should prove that child health interventions important economic return. The paper will follow the produce a strong equalizing or pro-poor impact, approach and present the principal results of the rather than merely demonstrate that the benefit/cost existing literature. ratio is high. Indeed, several arguments can be used However, in our view, the "economic argument" to show that the social benefits of health investments should not be the exclusive, or even the main, reason in children exceed their private benefits. for public investment in child health. Child health is First, the benefits of child health investments, first of all a positive social right, affirmed in interna- unlike the associated costs, only accrue to house- tional conventions.1 As such, governments ought to holds in the long term, and so they tend to be guarantee that all enjoy it equally, regardless of the misperceived or underestimated by adults, particu- associated economic benefits or costs. larly in situations of high fertility and extreme Furthermore, the fact that an investment is cost- poverty.3 This is not surprising, as immediate effective or that it is characterized by an extremely survival concerns hamper individuals' ability to 1. For instance, the Convention on the Rights of the Child, ratified by every country under the auspices of UNICEF in 1989 except for the United States and Somalia, recognizes health among the fundamental rights of all children (Art. 24). The United States did not ratify this convention because it states that no one should bear arms until the 18th birthday, whereas U.S. law authorizes arm bearing and military draft from 17 years of age. On the practical implications of considering child health as a positive right, see Belli (2002). 2. As Jack (2000) argued, cost-effectiveness picks up the cheaper interventions (those with the lower average cost), among those that the government decides to subsidize/provide, because they provide a benefit worth of social protection (see Hammer and Berman 1995, Hammer 1997, and Musgrove 1999). 3. Households can take decisions in their best interest when such decisions are repeated and their consequences are immediately perceived. This includes most consumption decisions. On the other hand, households are not as effective in taking one-time-only decisions or when benefits accrue only slowly over time. Decisions to save for retirement or to invest in child health belong to the latter category (see Atkinson and Stiglitz 1980, and Sadmo 1983). 1 The Economic Benefits of Investing in Child Health envision long-term consequences of day-to-day The relationship between health and the economy actions. In some cases, households simply ignore the (and development in general) is complex--another potential negative effects of their behavior on their important reason for not mechanically utilizing children. Consider, for example, the importance of estimates of economic return to justify investments in hygienic and environmental factors in explaining child health. Disentangling that complexity and child morbidity and mortality. The World Health establishing clear links of causation is a difficult task. Organization (WHO) (2002) estimates that 3 More recent contributions have questioned the million of all deaths among children under five traditional approaches to measuring economic years of age are related to poor environmental benefits, and have proposed more articulated and conditions. Children under five pay a high price, more rigorous methodologies (see section V). accounting for 40 percent of the total burden of The paper is divided into five sections. The first disease associated with environmental hazards when section briefly reviews current knowledge about the they only account for about 10 percent of the world relationship between health and development at the population. There clearly is an important role for macro level. The second section places child health in public information and health promotion (which the health-development relationship; it briefly are largely "public goods" in economic terms, and as describes the underlying and proximate determinants such can only be funded publicly). of child morbidity and mortality, and then intro- Second, there are significant positive externalities duces the principal consequences of child illness in linked to several child health investments, such as terms of impaired human development. The third immunization and vaccination services. Third, public section reviews existing evidence on the interventions investments in child health can contribute to guaran- available to improve child health and their cost- tee a more equal endowment of human capital across effectiveness. (These first three sections constitute an socioeconomic groups early in life. The literature introduction to the last two sections, which are the shows that the poor disproportionately suffer from core of our paper; a more detailed analysis of the disease and premature mortality (Gwatkin et al. literature surveyed in these first sections is left to 2000) because of unfavorable determinants of health annexes 2 and 3.) The fourth section presents our (see section II). Such disparities largely originate in conceptual and empirical understanding of the early childhood, and they permanently impair economic benefits of investing in child health, individuals' economic potential, perpetuating poverty outlining dimensions often neglected when public (Subramanian, Belli, and Kawachi 2002). Thus, in investment decisions are taken. In the fifth and final Sen's terminology, strengthening health during section we critically discuss the findings of the childhood can contribute to an essential "function- literature, pointing at the difficulties in the existing ing,"4 one of the material preconditions necessary for economic evaluation studies. We also attempt to each of us to flourish as individuals5 (Sen 1973, outline some possible paths to improve our ability to 1985, 1992). evaluate the economic consequences of improved child health outcomes. 4. Sen (1985) argues that a person's well-being is characterized not only by the state (functioning) in which a person lives or is living, but also by the existence of a range of alternative states from which the person can choose (capability). In empirical studies, it turns out that it is in fact extremely difficult to distinguish between capabilities and achieved functionings. 5. Note, however, that this argument is not so much in favor of investing more in child health per se, but rather in poor children. 2 I. The Relationship between Health and Economic Development I t has long been suspected that health plays a resulting from reduced child mortality (the "demo- major role in the well-being of peoples and graphic transition"). countries. The Great Plague of 1347­53 in Several macroeconomic studies have indicated that Europe, which killed about 60 percent of the lower levels of mortality and higher levels of life population in the countries affected (Le Roy expectancy have a statistically significant effect on Ladurie 1978), abruptly interrupted the income levels and growth rates (Barro and Lee 1994; Renaissance process started during the 13th Bloom and Sachs 1998; Bloom and Williamson century. It took over a century for affected 1998; Jamison, Lau, and Wang 1998; and Radelet, countries to return to pre-epidemic demographic Sachs, and Lee 1997). Jamison, Lau, and Wang levels and to restore their economies. Nineteenth (1998), analyzing data from 53 countries between century British prime minister Benjamin Disraeli 1965 to 1990, estimated the impact on income of a noted that "The health of the people is really the number of health-related variables, and concluded foundation upon which all their happiness and all that around 8 percent of total growth in per capita their powers as a state depend" (Evans et al. income during that time was due to improvements in 2001). adult survival rates. An analysis of recent data from More recently, a large number of studies have Madagascar confirms the strong link between life attempted to document the complex but certain expectancy and growth (Dumont 1999). linkage between health and economic development. Bloom and Williamson (1998) conclude that one- Studies documenting the relationship between third to one-half of the growth experienced from aggregate data on health and economic outcomes 1965 to 1990 in East Asia can be attributed to were first included in the World Bank's 1980 World reduced child mortality and the consequent reduc- Development Report. Since then, an extensive body of tion in fertility (the demographic transition; see literature in macro-economics and economic history section IV). Bloom and Sachs (1998) estimate that, has concluded that "the relationship between health between 1965 and 1990, morbidity/mortality rates improvement variables and economic growth is associated with their impact upon demographic sufficiently significant in the long term to justify trends contributed to about half of the unfavorable sustained national commitment to investing in gap in economic growth rate between Africa and the health" (WHO 1999a, p. 9). rest of the world. The macroeconomic literature, mainly focused on Mayer (2001) conducted similar evaluations for adult health, suggests that the two principal channels 18 Latin American countries, comparing economic through which health improvements cause a positive growth data with survival probability for various age economic impact are (1) increased labor productivity groups over 30 years. He estimated that between 0.8 and work participation and (2) increased savings and and 1.5 point of annual growth--or approximately investments in human and physical capital.6 These 40 percent of the total growth for these countries effects are reinforced by the demographic changes 6. These channels are distinct from those significant for child health, because during the productive years improved health status immedi- ately translates into improved labor market performance (see section IV). 3 The Economic Benefits of Investing in Child Health over the 1950­85 period--could be explained by The poorest human development countries, mean- improvements in survival. while, experienced a growth rate close to zero. Fogel (1994, 1997) used a methodology compa- All the above macroeconomic studies suffer from a rable to that used by the existing macroeconomic number of shortcomings (see section V), and they literature to study the relationship between health, may lead to the erroneous conclusion that there is a nutrition, and economic growth in 19th and 20th mechanical cause-and-effect link between improved century France and Great Britain.7 He pointed out health status and economic growth at the aggregate, the importance of health and nutrition variables in as well as at the individual, level.8 explaining economic growth, estimating that 30 In reality, the strength of this link depends on a percent of the per capita growth rate in Great Britain number of other variables. As Prah Ruger et al. between 1780 and 1979 could be explained by (2001) correctly underlined in discussing the eco- health and nutritional improvements. He hypoth- nomic impact of the demographic dividend in East esized that improved nutrition progressively lead to Asia, improved health outcomes contributed to greater weight for height ratios (Body Mass Index-- economic growth only because they occurred within BMI), enhanced capacity to work, and therefore to favorable general economic conditions supported by increased growth potential. adequate economic policies. Nonetheless, one major More recently, the WHO's Commission on conclusion from the literature remains true: countries Macroeconomics and Health (CMH) revisited the with the weakest health conditions have a much health-economic growth relationship. According to harder time achieving sustained growth than do the CMH report (WHO 2001a), during the 1990­ countries with better health conditions. 98 period, countries with high human development Finally, the macro-evidence-based literature according to the United Nations Development includes a significant number of studies that have Programme's Human Development Index achieved investigated the economic impact of specific health robust and stable economic growth, averaging 2.3 conditions such as HIV/AIDS and malaria. For percent per year, with 35 of the 36 countries enjoy- example, the Gallup and Sachs (2001) study of the ing rising living standards. The average growth rate economic impact of malaria9 uses a "malaria index" to for the same period for the middle human develop- measure the impact of malaria on economic growth ment countries was 1.9 percent, with 7 out of 34 in countries that are or have been heavily burdened countries experiencing declines in living standards. by the disease.10 The researchers point out the many 7. Essentially, to capture the independent impact of health variables, the literature uses country-level time-series and develops simple regressions--with per capita income growth on the left-hand side and macro health indicators (such as infant mortality rates and life expectancy) and other variables such as measures of market openness and macroeconomic stability on the right-hand side. 8. It is well known that aggregate analyses risk the invalid transfer of results observed at the aggregate to the individual level--the so-called "ecological fallacy" (Robinson 1950, Susser 1994). Consequently, the "contextual" determinants (the difference a place makes) and the "compositional" determinants (what is in a place) to health are often confounded (Hauser 1970). While statistical methods now exist to address this issue (Goldstein 1995), relatively few empirical investigations using improved quantitative procedures have been conducted. In general, existing studies are constrained by the quality of the available data (see section V). 9. In 2000, 84 percent of the deaths from malaria occured in children under five years of age (EIP 2000). Hence the burden of mortality for malaria, unlike for HIV/AIDS and TB, is particularly concentrated in children. 10. This index is obtained for each country by multiplying the share of the population that lives in areas with high malaria risk (according to WHO standards) by the share of the malaria cases that are P. Falciparum cases, the most dangerous of the different malaria parasites. A country is considered to be severely affected by malaria if the index is greater or equal to 0.5. 4 I. The Relationship between Health and Economic Development negative aspects of the disease on the well-being and according to a 1999 WHO review of the national TB economic opportunities of a country, showing that in control program. Health care costs related to the the period 1965­90 malaria-affected countries grew disease treatment were estimated to be equal to $500 1.3 percent less annually than countries not affected million, while indirect costs accounted for another by malaria. Over (1992), looking at the impact of $2.5 billion. Overall, these costs represented 0.7 HIV/AIDS on economic growth, showed that, at the percent of gross national product (GNP), and 13 beginning of the 1990s, HIV/AIDS was reducing percent of the total health expenditure (Appaix in growth rates by half a point annually in the countries press).12 worst affected by the epidemic. Studies of the Thus the evidence shows that successful invest- economic impact of tuberculosis (TB) have shown ments in health can create a potentially huge addi- similar results. In Peru, the Ministerio de Salud tional economic value in the future. The rest of this (2001) estimated that the total economic impact of paper focuses specifically on investments in child TB is $95 million annually, or 0.2 percent of current health. gross domestic product (GDP).11 In India, the economic burden of TB was evaluated at $3 billion 11. According to different mortality scenarios (mortality estimates differ according to data sources), the economic burden of TB in Peru is estimated to equal $95 (note that all dollar values used in this paper are U.S. dollars). This cost is composed of $19.5 million incurred by the health care system (direct costs, of which $4 million refer to expenditure paid for by the National TB Control Program), $24 million paid for by families (because of hospitalization and ambulatory care), and $50 million due to mortality (indirect costs to society). TB treatment costs represent 14 percent of public expenditure on health care, and 4 percent of the total (public plus private) national health care expenditure. Of the total impact ($95 million), $71 million (75 percent) is directly due to the disease, while $24 million (25 percent) is due to the fight against the disease. 12. Calculation made by Appaix from the Indian cost data and GNP and health expenditure estimates from World Bank (2000). 5 II. Children's Health in the Development Cycle F or the purpose of this study, we propose the Waldman 2000),14 a conceptual framework that following definition of "child health": the attempts to represent the various major steps and physical, mental, and social well-being and periods in the development of the human being sound development of the human being from (figure 1). The life-cycle approach reflects the fact conception to the time of sexual maturity. This that a significant share of deaths among children also means that, in the context of this study, all occur during the very critical early stages of life, with that affects this development and can impair the distinct determinants. Particularly, it identifies the harmonious and prosperous future of the child is "neonatal" period within "infancy," as a specific of interest and a cause of concern. subcategory when factors linked to pregnancy are still dominant in explaining most morbidity and mortal- This definition focuses not just on physical ity; after a month or so of life, external factors are the health, but takes into account a broader concept of predominant causes. "child development" (Claeson et al. 2000). Health is not an autonomous status that has no connections with the child's environment and socioeconomic context. In analyzing child health, we need to identify which factors affect or determine health, how Figure 1. The Life-Cycle Approach to Defining Health health problems can be addressed, and the effects of health interventions over time. The notion of "devel- Early neonatal period opment" permits consideration of psychological, Perinatal period Neonatal period cognitive, and social well-being components of health Pregnancy and health outcomes that are not necessarily trans- Infancy lated into health statistics but are crucial dimensions Birth 7days of a healthy start in life. 28 days Death However, we know that, even before the child is Adulthood 1 year born, prenatal care for the mother and the future 3 years Early infant creates an important impact on the latter's 20 years childhood 5 years 13­15 years Early school age health. Considering prenatal and perinatal health Reproductive allows us to consider the mother's health as a deter- period Childhood minant of child health.13 This link between the School age Adolescence child's and the mother's health has been well articu- lated by the life-cycle approach (see Claeson and Source: Adapted from World Bank (2001a). 13. Life in uterus has been traditionally accounted for by some cultures. For example, Koreans acknowledge the uterine life in their way of counting years: the newborn is already one year old on his/her day of birth. Acknowledging the toll that infant mortality naturally takes on children, Koreans mark with two celebrations the first steps of the child in life: at 100 days (bek'il) and at one full year of life. The next birthday is celebrated at age...60! 14. We have slightly adapted the life-cycle approach by introducing "early childhood" and "early schooling" into the model to acknowledge the fact that most of the under-five mortality and morbidity actually take place in the first three years of life, and to better reflect the various situations concerning early schooling around the world. 7 The Economic Benefits of Investing in Child Health Using the life-cycle approach, we can define as neonatal sepsis and meningitis, trauma, and tetanus) "child" the human being from conception to the time account for approximately 22 percent of all deaths of puberty, which includes the first years of schooling among children under age five (WHO 2001b). This but excludes adolescence; by this definition, child- latter group of causes is where least progress in hood is definitely terminated before the 15th birth- reducing child mortality has occurred (WHO day.15 In accordance with this definition, we include 2002a). Figure 2 summarizes the main causes of in our review school-based health interventions, such under-five mortality in low- and middle-income as de-worming or nutritional programs, but do not countries. include reproductive health issues related to puberty, Second, the bulk of mortality and morbidity adolescence, and sexual maturity.16 affects children living in the developing world: 98 percent of the deaths between birth and 15 years occur Estimating the Burden of Disease for Children in low- and middle-income countries (Murray and Lopez 1996),18 particularly in sub-Saharan Africa and The evidence shows some startling facts. First, South Asia. children suffer from a handful of preventable or curable diseases. As Gelband and Stansfield (2001) Figure 2. Major Causes of Mortality among Children under remind us, in 1999, such preventable and curable Five in All Developing Countries diseases accounted for approximately 70 percent of the estimated 10.9 million annual deaths among Pneumonia 20% children under age five in the world. The more widespread causes of deaths among children include Diarrhea 12% acute respiratory infections (ARI), diarrhea, and vaccine-preventable communicable diseases such as Malaria 8% measles.17 Pneumonia alone accounts for approxi- Malnutrition 60% mately 20 percent of all under-five deaths (ARI as a Measles 5% group accounts for about 22 percent of the total), followed by diarrhea (12 percent), malaria (8 per- HIV/AIDS 4% cent), measles (5 percent), and HIV/AIDS (4 per- Perinatal 22% cent) (WHO 2001b). Malnutrition is associated with the majority of these preventable deaths (Pelletier et Other 29% al. 1995; Caulfield and Black 2002). Finally, deaths due to birth-related problems (prematurity, asphyxia, Source: WHO (2001b). 15. The issue arises as to when to draw the line between child and adult health. International institutions interested in child health or development use different age limits in different studies according to the focus of their analysis. UNICEF covers human beings up to their 18th birthday as specified, for example, in the Convention on the Rights of the Child (1989). On the other hand, child health statistics usually concentrate on infants (up to one year of extra-uterine life) and on "children" up to the fifth birthday. For instance, one of the seven Millennium Development Goals relates to child health, and it demands that the death rates for infants and children under the age of five years be reduced in each developing country by two-thirds between 1990 and 2015. However, childhood does not stop at the fifth birthday, and the following years are equally critical to the harmonious development of the child. 16. Note also that our definition takes into account gender differences (girls tend to reach puberty a couple of years before boys). 17. Also in terms of disability-adjusted life years lost, the three main groups of disease are ARI, diarrheal diseases, and perinatal disorders (WHO 2001b). 18. The corresponding share of deaths between ages 15 and 59 occurring in developing countries is 83 percent. 8 II. Children's Health in the Development Cycle Third, over 30 percent (53 percent in sub- outcomes. For example, the disadvantaged social Saharan Africa) of deaths in the developing world position of the female child20 and of the mother exert occur in children younger than five years (WHO a negative influence on child health. 2001b), while the percentage of deaths in this age In turn, these socioeconomic or underlying group in industrialized countries is negligible. determinants contribute to create a more proximate Fourth, the empirical evidence shows that, after layer of determinants to health. These "proximate or registering a marked decline in the previous four intermediate determinants" of health include: decades, child mortality has been stagnant, or on the nutrient deficiencies (both of the mother and of the rise, since the early 1990s in several countries.19 child), maternal conditions such as maternal age and birth spacing, degree of environmental contamination (air, water, food, etc.), likelihood of experiencing Identifying theDeterminantsofIll Health injury, and personal illness control patterns (such as Provided here is only a brief overview of the personal preventive and hygienic practices).21 Figure comprehensive body of literature addressing the 3 summarizes the original understanding of the multidimensional causes of child illness. A more in- underlying and the proximate determinants of health depth discussion of the various determinants of child and their relationship by Mosley and Chen. health is contained in annex 2; see also Gelband and Almost 20 years ago, Mosley and Chen (1984, p. Stansfield (2001) for a more detailed account. 27) wrote: "In an optimal setting, over 97 percent of The evidence unequivocally shows that morbidity newborn infants can be expected to survive through and mortality are concentrated on children living in the first five years of life." Today, most high-income poorer and marginalized conditions, and in poorer countries. The so-called "underlying, or sociodeterminants" (Mosley and Chen 1984) of child Figure 3. Underlying and Proximate Determinants of Health illness and premature death are, in the first instance, lack of income and other financial means, no access to Socioeconomic health care and education services, absence of basic determinants physical infrastructure such as sanitary facilities, and Maternal Environmental Nutrient poor ecological setting. Social and cultural factors Injury factors contamination deficiency also play a role in a way that is partially independent from economic characteristics. For instance, children Growth may be excluded from education even in relatively faltering Sick wealthy households and contexts, because their Healthy family is socially marginalized due to ethnicity or Death cast. Specific cultural norms, such as those regulating Personal illness control Prevention Treatment marriage and gender relationships, or beliefs about disease causation, may also have an impact on health Source: Mosley and Chen (1984), p. 29. 19. The recent increase in child mortality in Africa is thought to be attributable to AIDS. However, child mortality rates have also stagnated or worsened in other countries, such as India, not yet affected by the HIV/AIDS epidemic, suggesting that other, less immediate reasons lie behind the observed negative results. 20. Desclaux (1996), among others, has shown that the social position of the child within the family is a significant determinant of his/her nutritional status. 21. All the proximate determinants of health can be grouped (WHO 2002a) into environmental and behavioral determinants. 9 The Economic Benefits of Investing in Child Health countries are actually achieving better results than Table 1. Intra-Country Disparities in Infant Mortality those hoped for by Mosley and Chen, with under- five mortality rates equal to or less than 1 percent. Sub- Asia/ Latin The same is not true, however, for lower-income Saharan Near East America/ countries, where up to 1 in 10, or, in the poorest Total Africa N. Africa Caribbean Number of countries 40 21 9 11 areas within countries, up to 2 in 10, newborn Poor/rich ratio infants die before reaching the age of five, mostly Mean 1.87 1.67 2.33 2.66 from preventable or curable diseases. Moreover, Range 1.11­ 1.11­ 1.42­ 1.26­ 4.18 2.46 3.93 4.18 within each country, the infants and children who Concentration indexa die belong disproportionately to poorer families, as Mean (.106) (.081) (.125) (.145) tables 1 and 2 show, although disparities between Range (.003)­ (.003)­ (.051)­ (.043)­ (.251) (.141) (.195) (.251) poor and non-poor vary enormously across countries. Note: Infant mortality is the proportion of children born alive who die Using data from the Demographic and Health before reaching age one. Surveys, Gwatkin et al. (2000) show that, on average, a 1 The concentration index is equal to: 12 2 MR (w)dw, where MR is 0 i i a child born in a household belonging to the lowest the cumulative proportion of mortality rates among children graphed against the cumulative proportion of their households' wealth wealth quintile is roughly twice as likely to die before (i=1,...,5). A negative (positive) value of the concentration index reaching age five than a child born in a household indicates inequality favoring the rich (poor). from the highest quintile. Source: Gwatkin et al. (2000). Unfavorable determinants of health not only lead to higher mortality but also result in disproportion- Table 2. Intra-Country Disparities in Under-Five Mortality ately higher morbidity.22 The early symptoms of impairments can be identified right from birth, with Sub- Asia/ Latin clear indicators such as premature births, birth Saharan Near East America/ defects, and low birthweight. Poor health status then Total Africa N. Africa Caribbean leads to disproportionately high morbidity from Number of countries 40 21 9 11 Poor/rich ratio communicable diseases, stunting, and low BMI Mean 2.06 1.79 2.69 2.99 (weight for height). Adverse health consequences Range 1.27­ 1.27­ 1.69­ 1.55­ continue in later stages of life, since children who are 4.67 2.60 4.60 4.67 Concentration indexa born with an impaired health condition are more Mean (.124) (.095) (.147) (.167) likely to experience chronic illness throughout their Range (.040)­ (.040)­ (.084)­ (.071)­ (.259) (.164) (210) (.259) life. Decouflé et al. (2001), reviewing longitudinal Source: Gwatkin et al. (2000). data for 9,142 children from Atlanta, Georgia (USA), observed that children born with major health defects lems).23 In sum, the evidence shows that health have a higher probability of experiencing develop- status depends on all past health investments, ment problems (7.2 percent, compared with 0.9 particularly those that take place in early childhood; percent for those born without such health prob- that poor health during childhood is likely to lead to 22. The morbidity indicators more commonly used in child health research are malnutrition, low weight at birth and during growth (wasting), low height for age (stunting), and low weight for height (low BMI). 23. Initial health handicaps can become chronic and lead to lower performance at school, lower school participation, a perceived poorer health status, and higher use of health care services. According to Boyle, Decouflé, and Yargin-Allsopp (1994), children born with health handicaps in the United States are 1.5 times more likely to utilize health care visits, use an average of 3.5 times more hospital bed days, are absent twice as many days from school, and are 2.5 times more likely to repeat any school year than children born without health handicaps. 10 II. Children's Health in the Development Cycle long-lasting negative health effects; and that health Secondary Consequences of Child Illness disparities separating children of different socioeco- Besides the primary consequences of illness (i.e., nomic groups tend to widen over time (Case et al. higher mortality and morbidity), there are also 2002). secondary effects, including reduced school participa- The question we turn to now is what other tion and attainment and, later in life, reduced consequences, besides higher mortality and morbid- productivity. ity, can be expected from poor health during child- hood. Box 1. The Link between Health and Learning Capacity in Children The existence of a strong link between health and learning capacity is demonstrated by several studies focusing on the more widespread infectious diseases and on malnutrition affecting children in poor countries. Parasitic helminth infections: There are two kinds of worm infections, those due to geo-helminthes (hookworm, round- worm, and whipworm) and schistosomiasis. Infections are most common among older children (aged 5 to 15). They induce anemia and have significant effects on cognitive function (Grigorenko et al. in press, Jukes et al. 2002) and school attendance. Nokes and Bundy (1993) found that absenteeism rose from about 15 percent in children not infected with whipworm to around 30 percent in children with the heaviest whipworm infections. Carefully controlled cross-sectional studies have found impaired cognitive function in children with the heaviest loads of schistosomiasis (Partnership for Child Development 2002, Jukes in press) and poorer school achievement in children with heavy loads of whipworm (Simeon et al. 1994) in Jamaica. Malaria: Malaria is a leading cause of school absenteeism. In the Congo, malaria was found to be responsible for 36 percent of absenteeism in the high-transmission season but only 3 percent in the low-transmission season (Trape 1993). Cerebral malaria leads to cognitive impairments (Holding et al. 1999), but no convincing evidence has demonstrated chronic impairments associated with less severe forms of malaria (Holding and Snow 2001). Iron deficiency: Iron deficiency is associated with poorer school performance and cognitive function in preschool and young school-age children (Grantham-McGregor and Ani 2001). Undernutrition: The evidence for the impact of severe malnutrition on cognitive function is particularly convincing in infants and preschool children (Grantham-McGregor 1995; Grantham-McGregor, Walker, and Chang 2000). Early childhood malnutrition can lead to cognitive impairments that last into the school-age years. Even short-term hunger (missing breakfast) leads to impaired cognitive performance in school-age children (Simeon and Grantham-McGregor 1989). Iodine deficiency: Iodine deficiency has its most profound effect during pregnancy, leading to cretinism and severe mental retardation. However, mild neonatal iodine deficiency can lead to long-term neuropsychological impairments (Lombardi et al. 1995). Iodine deficiency in school children is associated with impaired cognitive ability and poor school performance (Huda et al. 1999). 11 The Economic Benefits of Investing in Child Health Poor School Attendance, Cognitive Development, graphic consequences, as high mortality and morbid- and Educational Achievement ity rates maintain the necessity for high fertility in An important secondary consequence of child order to ensure a minimum number of surviving illness is impaired cognitive development and school- children and adults who can maintain the ing. Very young children have a great potential for household's productive capacity (see section IV). fast improvements in their cognitive ability, but if Finally, a high level of child mortality and morbidity they are exposed to adverse conditions, their future does not create a favorable context for investment in development can be critically jeopardized. Studies child development. The "value" of each child is conducted in Ontario (Canada), France, and Great maintained at a low level by uncertainty over his/her Britain (Institut Canadien de Recherches Avancées future and by the high fertility rate. Hence, a vicious 1999) show how health during early childhood underdevelopment cycle arises, as figures 4 and 5 (until three years of age) impacts significantly upon illustrate (with figure 5 spelling out the consequences the cognitive capabilities and school attainment of and effects in greater detail). the child. Similar effects have been documented in Where and how should one invest to break the studies conducted in developing countries, reviewed negative cycle and to initiate a new virtuous cycle in box 1. between health and development to bring about prosperity to both individuals and society? Which interventions are available, and how costly and Impaired Socialization efficacious are they likely to be? Illness or weakness may jeopardize the social participation of the child. Being unable to fully participate in social activities because of his/her Figure 4. The Health Development Cycle I health condition, the child is impaired socially, intellectually, and emotionally. Proximate determinants Long-Term Economic Consequences of Child of health Illness Underlying Health impairments and problems experienced determinants Health outcomes during childhood--and their consequences--reduce of health (health status) individuals' potential during adolescence and adult- hood, affecting their ability to be fully productive and to participate in economic and social activities. Long-term consequences Consequences of of the health status health on the child's This, in turn, hinders the possibilities for the adult of the child on the development process adult/society = factors and his/her family to improve their economic status. that affect underlying determinants of health In mainly agricultural settings, it also creates demo- 12 II. Children's Health in the Development Cycle Figure 5. The Health Development Cycle II Underlying Determinants Proximate Determinants Economically poor family Very young mother and Secondary Effects Secondary Effects short-spaced of Child Illness of Child Illness Socially birth intervals (Consequences (Consequences marginalized During Childhood) During Adulthood) household/ population (little Environmental Reduced · Lower or no access to contamination participation: productivity and health care and (air, food, water) · In schooling income education) Cognitive Handicaps · Reduced or · In social activities hampered social · Illness (high · In productive participation Hazardous/ morbidity and activities (present · No return visible unhealthy for household's Unfavorable mortality) practices investments in political/economic · Growth handicaps child health variables; poor · Mental and · Demographic sanitation, intellectual consequences infrastructure, Nutritional handicaps cognitive (larger families etc.) deficiencies handicaps with more (caloric frequent births deficiencies, Mental and social and deaths) lack of iodine, handicaps; impaired vitamin A, and human development Weak social in nutriments: position of the iron, zinc) child within the family (girl vs. boy, sick or weak child) Injuries: accidental and intentional Lack of education "Vicious/virtuous cycle" and vulnerable social position of the mother 13 III. Correcting Children's Impaired Health and Development H aving identified the determinants of child A sizeable body of research (for a careful review, health, their interaction, and their see Gelband and Stansfield 2001) has reached consequences, the paper now briefly largely positive conclusions concerning the potential reviews what can be done to correct them. We know effectiveness of many preventive and treatment that governments have at their disposal a vast array of interventions in reducing child morbidity and prevention and treatment programs to impact child mortality. For instance, the World Bank estimated health, either directly targeting illnesses or acting that the Expanded Program on Immunization is one upon the various determinants of health. of the most cost-effective child health interventions, costing $12 to $15 per disability-adjusted life year In recent years, integrated programs have been (DALY) gained in low-income countries (World introduced that include joint case management of Bank 1993).25 The EPI covers all vaccine- various diseases along with health education. These preventable diseases affecting children, including programs are meant to improve the quality and measles, pertussis, polio, diphtheria, and tetanus. efficiency of health care services and to influence The Bank further estimated that 10 percent of all household behaviors (see box 2). Two such programs the burden of disease among children under five are the Integrated Management of Childhood years of age could be averted through the diffusion Illness (IMCI)24 and the Integrated Management of of EPI (World Bank 1993, p. 76). The new Pregnancy and Birth (IMPB). The IMCI program integrated programs such as the IMCI and IMPB exploits the synergies among individual preventive, programs, although not yet fully tested, are treatment, and educational interventions against potentially even more effective in reducing child child illness; the IMPB program acknowledges the morbidity and mortality than interventions against role of the individual mother in her child's early specific illnesses.26 development and tries to integrate mother and child health monitoring and care. IMPB interventions are Existing cost-effectiveness estimates should be often associated with family planning strategies that taken with caution, because they are based on target the number of births and birth spacing, plus context-specific hypotheses27 (see Filmer, Hammer, health education and medical care to mothers and and Pritchett 1998 and section V of this paper), but children. the general message they convey still stands: several 24. Launched in 1996, by end 2001, IMCI was in the expansion phase in 29 countries, in the early implementation phase in 40 countries, and recently introduced in another 22 (WHO 2001b). 25. These costs are in 1990 U.S. dollars. Converted to 2002 values, these would become approximately $15 to $22. 26. Some recently implemented integrated programs such as IMCI still lack cost and effectiveness data. Systematic WHO-sponsored evaluations are currently under way. 27. Sometimes cost-effectiveness estimates are based on normative costs or best practice protocols rarely matched by real-world situations, particularly in poorer countries. Filmer and Pritchett (1997) showed that if one considered the evidence from developing countries on actual public sector cost-effectiveness, one would reach estimates of cost-effectiveness several orders of magnitude higher (worse), than those estimated by theoretical computations. A host of factors, mostly context-specific, contributed to determine how effectively health interventions and programs, all cost-effective in ideal settings, reached their objectives. 15 The Economic Benefits of Investing in Child Health Box 2. Main Interventions and Programs to Reduce Infant and Child Mortality and Morbidity · Targeting underlying and proximate determinants or causes of ill health -- Environmental/sanitary measures (access to water--both in quantity and quality, refuse collection) -- Domestic/household measures (refuse management, basic hygiene, ventilation) -- Education (mainly for the mother, but some studies argue that paternal education is as important) -- Asset redistribution and interventions aimed at enhancing asset productivity (for example, microcredit programs to improve agriculture) -- Nutritional complements (mothers) -- Family planning · Directly targeting illness and other health impairments · Prevention -- Immunization (EPI) -- Breastfeeding -- Complementary feeding (calories) -- Nutritional complements (essentially iron, vitamin A, zinc) -- Prenatal care -- Assisted birth -- Social programs (impacting the management of child growth and the diffusion of health information to children and families) · Treatment -- Interventions on particular conditions (malaria, diarrheas, ARI, HIV/AIDS, helmynthic diseases) -- Integrated programs (IMCI, IMPB) -- Management of malnutrition (example of CREN in Burkina Faso) existing interventions could potentially lead to the long-term costs and benefits would be of expand- significant reductions in child mortality and morbid- ing child health interventions and programs.28 This ity, if appropriately scaled up. paper focuses on the benefits side, trying to give an account of the full economic potential of reducing In summary, we know in principle what works. It children's burden of disease and mortality. is less clear, both conceptually and empirically, what 28. The WHO's CMH recently attempted to quantify the potential costs of scaling up interventions to reduce the burden of disease for HIV/ AIDS, TB, and malaria. The CMH estimated that an additional 8 million lives per annum could be saved as soon as 2010, with an additional investment of $57 billion per year by year 2007, and up to $94 billion by 2015. These additional funds would practically double the total amount of current foreign assistance with investments specific for health, and it is probably unrealistic to expect that donor countries will pledge anything near this magnitude to scale up existing interventions. However, the CMH notes that, as a consequence of this investment and its return in terms of reduced burden of disease, "Economic growth would also accelerate, and thereby the saved DALYs would help to break the poverty trap that has blocked economic growth in high-mortality low-income countries." Based on a conservative estimate that each DALY saved yields an economic benefit equivalent to one year of income, the CMH calculates that the economic return of such a massive additional investment would be $186 billion per year (and may be several times that by 2015), thus largely exceeding its expected cost (WHO 2001b, p.13). No comparable estimates are available for the costs and benefits of scaling up investments specifically targeting children's health. 16 IV. Potential Economic Benefits from Child Health Investments C hild health improvements can create an 5. Increased parents' participation in labor markets economic impact through a variety of and increased children's participation in house- channels:29 hold productive activities. 1. Improved cognitive ability. 6. Increased household propensity to save for and to invest in children. 2. Increased school participation and enhanced school attainment. 7. Increased social cohesion. 3. Benefits from the induced demographic changes Figure 6 shows how these channels link child (reduced fertility, wider birth intervals, slowing health to economic performance, as well as how of population growth, demographic transition economic development in turn affects child health, with smaller dependence ratios). i.e., the link is reciprocal. Investments in child health can prove beneficial for the economy in the medium- 4. Reduced cost of medical care (in the short to-long term, and the positive economic effects will term). Figure 6. Channels through which Child Health Interventions Affect the Economy Cognitive development; school attainment; school participation Induced demographic changes Improved economic Investments Increased parents' performance, Health in Child propenstity to invest stronger outcomes Health in children economic growth, Reduced cost of reduced medical care inequality, etc. Proximate Increased parents' determinants participation in labor of health markets and increased children's participation in household productive activities Underlying determinants of health 29. Not all of these channels have been examined empirically--the first four have, the last three have not. 17 The Economic Benefits of Investing in Child Health then reinforce the improved health outcomes for attainment; the demographic changes induced by adults and for children, thanks to better living lower child mortality; and the savings in treatment conditions, better access to care, lower fertility, etc. costs attainable through preventive interventions such as immunizations. The Impact of Better Health for Children: The Evidence Improvements in Cognitive Abilities, School Participation, and Attainment Over the last few years a significant body of research has attempted to measure the socioeconomic As discussed in section II, the combination of impact of child health interventions. Determining high mortality and high morbidity thwarts children's the economic effects of a program to improve the cognitive development and discourages human health status of children, particularly in the first five capital investment (because parents are insecure years of life, requires a multistep process, correspond- about their children's survival, and because returns ing to each of the links represented by the arrows in from investing in education when children are figure 6. If the investigation is to be rigorous, one frequently or chronically ill are lower than when they should first identify a few health outcome variables are healthy). This reduces skill-accumulation and (for example, morbidity and mortality measures) and thus over time stymies returns to the economy's estimate the program's impact on them. The second human capital, jeopardizing growth potential. step would be to estimate the impact of improve- A significant body of literature has studied the ments in health outcomes over cognitive ability, years impact of various health interventions on children's of schooling, grade achievement, etc. Finally, one cognitive ability and school participation, focusing on should evaluate the impact of the latter "intermediate children in the poorest countries where infectious performance" variables, such as years of schooling, disease is rampant. The literature shows that medical upon individual productivity, wages, and other and nutritional supplementation interventions can economically relevant variables (such as labor force contribute to increased school attendance, and over participation) in the future. time can remedy cognitive deficits, particularly if It is immediately clear how difficult it would be accompanied by educational interventions or psycho- to isolate individual effects from the complex links of social stimulation in younger children. The literature mutual causation, and that a rigorous analysis would offers the following two key messages: require "experimental" data observed over time of a 1. As far as the effect of disease on cognitive quality rarely available in reality.30 development is concerned, prevention is clearly In the absence of longitudinal data, few studies better than cure; have attempted to develop a full cost-benefit analysis 2. Multidimensional, or integrated, programs that of specific child health interventions. Most studies combine educational, nutritional, and health focus on one of the potential intermediate channels, interventions are more efficacious than single- mainly the impact of better health on children's intervention programs. cognitive abilities, school participation, and school 30. Two types of study design, cross-sectional (based on survey data) or longitudinal, characterize the research on the socioeconomic impact of child health interventions. In fact, longitudinal data are the only appropriate ones to determine links of causality, but data measuring the economic impact of health interventions are rarely available over a long period of time (see section V). 18 IV. Potential Economic Benefits from Child Health Investments The link between children's anthropometric Figure 7. Impact of a De-Worming Program on School measures and their cognitive skills, school attendance, Attendance in Kenya and grade achievement has been extensively studied. For example, Jamison (1986) studied 3,000 children Treatment Group Comparison Group in Gansu and Jiangsu (China); he estimated that a Proportion one standard deviation increase in the weight-for-age 0.6 0.56 ratio is associated with an extra 0.3 year of schooling. 0.5 Behrman and Lavy (1993), using data from Ghana 0.44 on 1,224 children, showed that the effects of health 0.4 0.37 on schooling and school attainment tend to "evapo- 0.30 rate" with time, but confirmed that nutritional and 0.3 health status do impact cognitive capacities at early 0.2 0.19 ages. Moock and Leslie (1986) found a positive link 0.14 between height-for-age and weight-for-height and 0.1 the probability of school attendance. They also found a positive relationship between height-for-age and 0.0 High Attendance Low Attendance Dropouts school attainment. On average, in their study sample, (81 ­ 100%) (41 ­ 80%) (0 ­ 40%) an increase of 10 points (from 80 to 90 percent and School Attendance Rates from 90 to 100 percent of the standard height-for- age) was associated with an increase in the probabil- Source: Miguel and Kremer 2001. ity of school attendance for that year (from 0.004 to 0.053 and from 0.053 to 0.271, respectively). in their cognitive abilities if they were exposed to specific education programs. Several studies focus on the short-term impact on cognitive ability, school participation, and school A recent study in Kenya by Miguel and Kremer attainment of interventions against specific infectious found improved attendance in primary schools diseases or nutritional deficiencies. receiving anti-helminthic treatment, and also in neighboring schools that did not receive treatment, Parasitic Helminth Infections. Simeon et al. (1995) pointing to a positive externality of the de-worming found that spelling scores were positively affected by program (figure 7). After treatment, infections and anti-helminthic or de-worming treatment only for absenteeism both decreased by 25 percent. Miguel children with the heaviest worm burdens, and school and Kremer estimate a cost of the program per attendance was improved for children who were also additional year of school participation of only $3, stunted. In general, conventional tests show and a benefit/cost ratio of approximately 10:1. improved cognitive abilities as a result of treatment only in children with the heaviest worm loads. By Malaria. Shiff et al. (1996) found improved school contrast, a recent approach using an innovative attendance in Tanzanian villages participating in an method of "dynamic testing"--tests of ability to learn insecticide treated bednets trial. Earlier studies (Grigorenko et al. in press)--found that anti- (Colbourne 1955) demonstrated a 50 percent helminthic treatment improves potential to learn in reduction in school absenteeism due to sickness children with moderate to heavy infections as well. among children receiving malaria chemoprophylaxis However, children were only able to translate this in Accra, Ghana. No study has demonstrated improved learning potential into actual improvement improvements in cognitive function or school 19 The Economic Benefits of Investing in Child Health achievement as a result of interventions designed to Induced Demographic Changes reduce malaria prevalence. Significant reductions in child mortality set in Iron Deficiency. A few studies suggest that, after as motion the so-called demographic transition. Bloom little as two or three months, iron therapy has a and Williamson (1998) identify three phases in this positive impact on cognitive function of preschool transition. In the first phase, child mortality declines and young school-age children. In Chile, children while no reduction in fertility occurs. As a result, with anemia who were successfully treated performed there are relatively more unproductive youth (the 10 to 400 percent better on standardized tests than "youth glut"), the dependency ratio (the ratio of the children who were not (Claeson and Waldman inactive to the total population) increases, and 2000). A recent study in Tanzania by Stoltzfus et al. economic growth tends to fall. This first phase is (2001) found benefits in language and motor called the "demographic burden." development for preschool children exposed to an In the second phase, birth rates start declining. iron supplementation program. Soemantri, Pollitt, Since parents make decisions about the number of and Kim (1985), analyzing a study of 231 anemic children to have based on the likelihood of the children (not stunted, with no height or weight number of children surviving, families progressively deficit, no communicable or parasitic disease, divided adjust their fertility rates to the lower infant and at random into one treatment and one control group) child mortality rates. Over time, the lower birth showed that school test results for the treatment rates, and the progressive entry into the labor force of group improved 10 percent after 12 weeks of extra workers, due to higher child survival rates in the treatment with iron supplementation. However, a first phase, reduce the dependency ratio: the share of study of 1,222 children by Johnston (1995), population that is of working age rises, determining conducted in four remote villages of Guatemala, higher economic growth. At the same time, mothers estimated that intelligence quotient (IQ) test results are burdened by fewer pregnancies, and they can were more significantly linked to socioeconomic participate more in the labor market. In studying conditions than to nutritional history. The evidence East Asian economic growth, Bloom and Williamson linking iron therapy to school achievement and (1998) called this stimulus to growth induced by school attendance is still unclear (see Grantham- demographic changes the "demographic gift." They McGregor and Ani 2001 for a review). suggest that East Asia went through the first phase Iodine Deficiency. Van Stuijvenberg et al. (1999) between 1945 and 1960, and through the second showed that fortified biscuits containing iodine, iron, phase between 1960 and the late 1980s. Their and beta-carotene lead to improvements in cognitive estimates show that the demographic gift might have function and school attendance. By contrast, trials accounted for nearly 2 percentage points of East with iodine supplementation alone failed to find any Asia's average economic growth of 6 percent per benefit on children's cognitive function (Huda, annum over the period 1965­90. South Asia and Grantham-McGregor, and Tomkins 2001). Africa, by contrast, have only recently begun to see 31. The conclusion from Bloom and Williamson's analysis was that the demographic changes induced by accelerating declines of child mortality in Africa and South Asia, where most of child mortality is concentrated, would initially hamper economic growth. However, Bloom and Williamson noted that mortality rates were already declining in South Asia and Africa, and that these regions were already in the gift stage. However, as noted in section II, the previous trend toward declines in child mortality seems to have stopped over the 1990s. 20 IV. Potential Economic Benefits from Child Health Investments any appreciable demographic gift, and the estimated higher-income countries. In fact, the opposite is most contribution for 1990­2025 to current growth likely to be true: overall, achieving better health care trends is smaller than that experienced earlier by East for children in poor countries would entail higher Asia (around 0.75 to 1.6 percentage points per health costs and higher levels of government expendi- annum between 1990 and 2015).31 ture. In the last stage of the demographic transition, as There is no doubt, however, that even in poorer survivors from the first phase start aging, the share of countries certain preventive programs are able to the population that is working eventually declines. bring about reductions in future medical expendi- The lagged effect of the decline in birth rates in the tures. An immunization program, for example, can second phase accelerates the fall, the dependency ratio save future expenditures in health care to cure ill rises again, and, as a consequence, economic growth is children and non-immunized adults. Reviewing the reduced. The initial demographic gift eventually effects of immunization against measles in the state of evaporates. Guerrero (Mexico), Solis (1999) showed that the total monetary cost of achieving 100 percent immu- The demographic gift theory is mainly supported nization for children under five years of age was lower by macro-, non-experimental evidence. However, new than the expected cost of confronting an epidemic evaluation studies of the Progresa project in Mexico comparable to that which affected the Mexican state (Skoufias 2001; see annex 4 for a detailed discussion) in 1989­90.32 Karoly et al. (1998), reviewing data are bringing fresh and more rigorous empirical on several immunization programs, reported that support to the hypothesis that health and education estimates for savings in future medical costs can range interventions bear a significant demographic impact. from 6 to 30 times the cost of the programs.33 Progresa is a program launched in August 1997, with education, nutrition, and health components. The Similarly, studies on the impact of family plan- evidence shows that investments in health and ning policies have shown that they constitute cost- education are contributing significantly to reduce effective investments whose benefits include lower fertility and demographic growth among the more numbers of births, fewer abortions (and fewer than 2.5 million poor rural families targeted by complications), lower maternal deaths, and savings in Progresa. future health care costs. Among several studies, one by Martinez Manautou (1987), showed that, due to the Mexican population and family planning (PFP) Savings in Health and Other Social Expenditures program, between 1972 and 1985, 0.4 million Children who are ill in lower-income countries are abortion complications were avoided. Benefits of the less likely than children in industrialized countries to PFP program (in terms of avoided health care costs) receive any formal medical treatment. Hence, im- started to exceed its direct costs as early as 1974 proved child health cannot translate immediately (cost/benefit ratio equal to 1:1.2). In 1985, the ratio into reduced medical expenses, as is the case in had increased to 1:10.6. 32. Their computations do not take into account that families frequently had to sell their much-needed assets to be able to afford health care services, nor do they consider the psychological suffering associated with the loss of life. 33. However, these estimates only cover direct costs to the health system, and cost savings are computed by comparing the immunization costs with treatment costs for various communicable diseases if there had been no immunization program and the disease had occurred. One can argue that a health system that does not invest in immunization is likely not to be able to treat the future disease either, as is the case in many of the poorest countries around the world. 21 The Economic Benefits of Investing in Child Health In 1997, a government commission that investi- future economic benefits are in the area of nutri- gated Vietnam's PFP programs estimated that for tion.34 Three early examples include a cost-benefit each dong invested at the national level in PFP study of a protein-supplementation program in Chile programs, 7.6 dong were saved in social sector by Selowsky (1971), a nutrition program in the spending (NCPFP 1997) A similar inquiry in the Philippines by Popkin et al. (1980), and a study of Philippines showed that benefits of PFP programs the cost and economic benefits of a supplemental range from lower child and maternal mortality to feeding program targeted to malnourished children savings in a variety of other health and health-related in the Indian state of Tamil Nadu (Knudsen 1981). government expenditure (Legislators' Committee on All three authors try to evaluate the effects of nutri- Population and Development 1993). The study tion health programs on children's future earning expected PFP programs to save 9.3 pesos in educa- potential. Popkin et al. also consider what they call tion, health, and social services for each peso invested "social benefits," identified as reduced treatment costs in the programs. Favorable returns on the investment in outpatient facilities for children suffering from in PFP programs have also been observed in wealthy severe vitamin A deficiency but benefiting from the industrial countries such as the United States (Torres vitamin A supplementation program. Knudsen et al. 1986) and the United Kingdom (Laing 1982). explicitly evaluates social benefits by considering distributional weights that assign greater weight to The literature has also investigated the broader, the poor in computing program benefits. long-term economic benefits of investing in child health, focusing on nutrition programs; integrated In an early study of the effects of proteinic programs containing nutrition and health compo- supplementation given to severely malnourished nents; and the influence of anthropometric measures infants (the proteinic supplement was given through on labor market performance. These studies are milk), Selowsky (1971) built a full cost-benefit discussed below. analysis by linking the sequential effects of the nutritional intervention on weight, intellectual capacity, and future earnings (based on adults' IQs). Evidence of the Economic Impact of Nutrition He used data collected in the late 1960s by Programs Kardonsky and colleagues from 33 infants from a This section reviews the literature that has northern barrio of Santiago and hospitalized for attempted to conduct a full economic evaluation of malnutrition (with a weight at least 40 percent lower child health interventions. Most of the available than standard for their age). Kardonsky et al. (n.d.) studies linking child health intervention to their had already observed a correlation between severe 34. Note that none of the existing cost-benefit studies can base its conclusions on real data, but they are all based on simulations of the long- term economic benefits of improved health outcomes. 35. Kardonsky and colleagues, whose preliminary work served for Selowsky's analysis, seemed to have anticipated Behrman's critique of the lack of control on socioeconomic variables in this type of study. They had elaborated a socioeconomic control variable made up of ten indicators of well-being: type of housing, toilet facilities, bathing facilities, cooking facilities, location of cooking facilities, ownership or rental arrangement of the house, elimination facilities, water source, lighting system, and per capita income (Selowsky 1971, p.13). Each indicator or sub-component of the variable was measured by a quality index. Four per capita income brackets were also defined, and all components, including the per capita indicator, had the same maximum score. Even with the introduction of this variable to control for the socioeconomic context, results of the analysis of the relationship between nutrition and IQ were not altered. 36. For this, Selowsky used a longitudinal study involving 61 children from high-income households and conducted over 18 years by Bayley (1949). The study showed that the IQ measured at age 17 (with a Stanford-Binet test in particular, but not only) was predicted with a probability of 0.51 by that measured at age 2, 0.71 at age 4, and 0.92 at age 11. 22 IV. Potential Economic Benefits from Child Health Investments malnourished status and results on cognitive tests. capital can, for policy purposes, be affected by an improve- Selowsky, following on the same path, compared ment in capital markets (i.e., loans for high school or college these data with those of 7 normally nourished education).This is hardly true for earlier types of invest- children from the same barrio. Controlling for a ment in human capital. For these investments, perfect variety of socioeconomic variables,35 he estimated capital markets are not a substitute for income redistribu- that a gain of 10 percent in weight was associated tion, the main determination of early investment in human capital (Selowsky 1971, pp. 26­27). with a gain of 5 to 6.5 points in IQ tests (Terman- Merril Intelligence Test). Then Selowsky used the This last remark is important. It demonstrates an results of a study of IQ tests given to a group of 91 early attempt to go beyond cost-effectiveness and construction workers, showing that wages were cost-benefit criteria to justify public investment in strongly linked to the IQ tests' results (a 10 percent child health, by showing that the consequences of increase in IQ was associated with 6 to 6.5 percent failing to provide adequate nutrition to children at an higher wages). Projecting children's IQ differentials early age are irreversible. The qualitative consider- to adult age,36 Selowsky estimated that the proteinic ations at the margin of the early attempts at measur- supplementation program could be characterized by ing economic benefits are still vital and signficiant for a cost/benefit ratio of 7.5 to 8.2 and a return rate of 19 today's debate, perhaps more than their quantitative to 25 percent, varying mostly with the price of milk. cost/benefit estimates. Comparing this return with those prevalent at the Knudsen (1981) estimates the increase in earn- time in Chile for investments in physical capital (15 ings resulting from improvement in cognitive devel- percent) and education (17 percent for primary and opment and longer schooling for severely and moder- 15percent for secondary), Selowsky concluded that ately malnourished children exposed to a nutritional investing in nutritional programs would be one of the program.37 He estimates that the earnings potential more productive investments that the government increase due to the program is equal to 55 percent on could undertake. average for severely malnourished children,38 and In his concluding remarks, Selowsky wrote: 27.5 percent for non-severely malnourished children. Knudsen also considers the impact of reduced child If infant nutrition has an effect on an individual's future mortality and longer life expectancy on total popula- economic productivity, it must be considered as one of the sources of human capital formation. However, infant tion growth. nutrition is characterized by some major differences with The overall economic rate of return for the other types of investment in human capital, i.e., formal project, under the more realistic assumptions con- schooling, on-the-job-training, etc. First, infant malnutri- cerning its coverage and its performance, is estimated tion can hardly be substituted by later types of investment to be 14.5 percent. It increases to 21.5 percent if its in human capital. On-the-job training is a much better redistributional benefits are considered as well (the substitute for deficit in years of schooling than deficits in program disproportionately benefits the poor and the preschool IQ. Second, later types of investment in human more vulnerable individuals within poor families). 37. The earnings equation estimated by Knudsen is the following: Log W = a + bS +cA +dT, where W = wages, S = years of schooling, A = preschool ability, and T= age. It is assumed that the nutrition program influences A and S (considered as a function of A). 38. Ten percent of the total 55 percent increased earning capacity results directly from the effect of higher cognitive capacity, while 45 percent results from an increase in schooling, due to improved cognitive capacity. Knudsen points out that "malnutrition...seems to reduce productivity of adults by reducing ability and the number of years and effectiveness of education" (Knudsen 1981, p. 48). Rates of return of the feeding program are calculated separately for children of poor and rich families, and the conclusion is that the rate of return is higher for children of relatively wealthier households who enjoy better access to education. 23 The Economic Benefits of Investing in Child Health Knudsen also develops a sensitivity analysis, conclud- Table 3. Increase in Net Present Value (NPV) of Productivity ing that, under all but the most pessimistic scenario, Due to Improved Social Indicators Resulting from ICD Programs the expected efficiency benefits of the project exceed its costs (assumed to be 10 percent, the opportunity NPV of Increase cost of capital). If the social benefits are also taken Education in NPV Indicator System due to ICD into consideration by using the distributional 0. Baseline: without ICD 966,212 -- weights, the program's expected benefits always exceed its costs. A. Under-5 mortality reduced 1,031,933 65,721 from 162 to 105 per 1,000 A few more recent examples of cost-benefit studies live births to evaluate the economic impact of a nutrition B. Primary enrollment increased 1,412,156 445,944 from 65% to 95% program include: C. A and B combined 1,508,210 541,998 1. Soemantri et al. (1985), who estimate that an D. C, plus improved primary 1,997,847 1,031,635 increase of 10 percent of cognitive capacities is school performance associated with an increase of 13 to 22 percent E. D, plus increased progression 2,901,864 1,935,652 of wages, according to their analysis of Indonesian to post-primary education data. Note: Data represent estimates in U.S. dollars of the less favorable of two scenarios simulated by the authors; discount rate is 7%. 2. Behrman (1993), who reports results from Source: Van der Gaag and Tan (1996). studies in Pakistan (Behrman, Ross, and Sabot 1991) as well as from Kenya and Tanzania and are currently undergoing a process of rigorous (Boissière, Sabot, and Knight 1985), which evaluation. One such program is Progresa (now show that the improvement in intellectual Oportunidades) in Mexico. Behrman and Hoddinott capacities of children under five can bring about (2000) have attempted to isolate the future economic increases in future wages of 10 to 27 percent. benefits of the nutrition component, and have 3. Glewwe, Jacoby, and King (2001), who utilize estimated that this component of Progresa alone longitudinal data from Cebu (Philippines) to might trigger an increase in future wages (at adult estimate the cost/benefit ratio of a nutritional age) for beneficiary children of 2.9 percent. This does program, and conclude that every monetary not include the effects of better nutrition on school- unit invested in the program could return ing, which, in turn, will create a further positive approximately three units of additional wages effect on future productivity and wages of beneficia- through improved academic achievement. ries. Annex 4 presents the main findings of numerous evaluation studies of the program Progresa/ Oportunidades, as well as of other integrated pro- Evidence of the Impact of Integrated Programs with grams such as the High/Scope Perry Preschool a Significant Health Component program. Recently, integrated programs, including health, Another example of an integrated program where nutrition, education, and income-supplementation the health component is large enough to be specifi- components, have been introduced in several coun- cally studied is the Programa Integrado de Desarrollo tries. These include treatment and control groups, Infantil, or Integrated Child Development (ICD) 39. Several contributions have shown that most of stunting happens before age three. See, for instance, Martorell (1985) and Steckel (1986). 24 IV. Potential Economic Benefits from Child Health Investments school, the expected benefits are much higher. Figure 8. Channels through which Illness Reduces Income Considering all measurable benefits, the authors finally estimate that the total cost/benefit ratio lies Higher fertility Labor force Higher between 1.38 and 2.38 for every monetary unit and child reduced dependency mortality by mortality and invested in the program. child mortality ratio early retirement Lower per capita Micro-Studies on the Relationship between income Anthropometric Measures and Labor Market Performance Labor Adult illness This section briefly reviews the literature on the Child illness productivity and reduced malnutrition economic impact of adult health and improved health outcomes in general (for more detailed re- Reduced access to Child natural resources views, see Prah Ruger et al. 2001 and Subramanian, malnutrition and global economy Belli, and Kawach 2002) through labor market performance. This literature is directly relevant for Less schooling Reduced evaluating the economic impact of child health and impaired investment cognitive capacity in physical capital interventions because of the measures of health that it presents. For instance, one measure frequently Source: Prah Ruger (2001). utilized (see Behrman 1993, and Thomas and Strauss 1997) is height, which is clearly dependent on all programs, in Bolivia. Using data from the program, past health investments in health, particularly those Van der Gaag and Tan (1996) estimated the eco- that take place in early childhood.39 Hence one could nomic return of the health component of ICD conclude that, in the absence of longitudinal evi- programs. They did so by first estimating the impact dence, the cross-sectional evidence that shows a of health gains achieved through the ICD program positive relationship between adult height and labor- on years of schooling, and then by estimating the market performance provides the strongest supports economic returns to education. They conclude that for the hypothesis of a positive long-term economic increased survival of young children leads to signifi- impact of child health interventions. As Fogel wrote, cant economic benefits. Table 3 summarizes their "These findings (linking mainly anthropometrical findings. measures related to nutritional state during child- The estimates in table 3 mean, for example, that a hood and economic outcomes) suggest that payoffs reduction in under-five mortality from 162 to 105 later in life need to be factored into the cost-benefit per 1,000 live births would generate an additional analyses of programs aimed at improving nutrition economic return equal to $65,721, just considering and health care at younger ages" (Fogel 1997, pp. the direct health benefits of the program in terms of 471­72). Figure 8 shows the impact of illness in higher child survival. Considering also the secondary both adults and children on the economy and per effects of improving children's survival rates, such as capita income. the increase in the number of children attending 40. In fact, although the significance of the correlation between anthropometric measures and productivity and wages is different in the different studies, it is always of the same sign, showing that more favorable health indicators result in higher productivity and wages, particularly for low-skilled laborers. 25 The Economic Benefits of Investing in Child Health A study by Deolalikar (1988) found no clear Similarly, Dumont (1999) confirmed the robust- linkage between the amount of calories absorbed by ness of the relationship between health, level of workers and their wages or the output in the agricul- education, and income. Using data collected from ture sector of southern India, but it did find a 3,000 urban households in Antananarivo (Madagas- positive relationship between their anthropometric car), he estimates that, for the adults surveyed, being characteristics (such as weight for height) and 10 centimeters taller than average was associated with productivity (with an elasticity equal to 1.9) and one third of a year of additional schooling and 11 wages (with an elasticity of up to 1.6). Deolalikar percent higher wages. estimated that the human body (of adults) adapts Reviewing the literature on the labor market better to nutritional hazards, while it is more diffi- impact of improved health status outcomes, Strauss cult to compensate for unfavorable anthropometric and Thomas (1998, p. 813) concluded more cau- structural characteristics, especially for tasks requiring tiously that if "poor health...does appear to reduce strength. A study by Haddad and Bouis (1991) in labor supply...the evidence that it affects productiv- rural Philippines (on the island of Mindanao) also ity and wages is more ambiguous."40 However, they showed a positive relationship between anthropomet- note that ric data and wages. Thomas and Strauss (1997) investigated the relationship between anthropometric a small number of studies suggests that health has a larger data and wages in a study based on a sample of return at very low level of health and (perhaps) in jobs requiring more strength.With economic development...one 34,000 adults in urban areas of Brazil in 1974­75 might expect the labor market impact of improved health to (16,000 women and 18,000 men). They showed decline, especially relative to the impact of education and that height and weight-for-height are positively skill acquisition (Strauss andThomas 1998, p. 813). correlated with wages, and that this relationship is particularly strong for uneducated adults. 26 V. Analyzing Economic Benefits of Investments in Child Health: Limitations and Potential T he literature reviewed in the previous Behrman, the only public-good component of section attempts to document the potential nutrition programs consists in the collection and returns of specific interventions and more dissemination of information on nutrition and its general programs that target children. This section benefits. discusses these findings and explores the Building upon Behrman's contribution, one can limitations of the studies and the possibilities point to the following shortcomings of the literature offered by new methodologies. that has attempted full cost-benefit evaluations of Knudsen's work (1981) on the economic benefits child health programs: of a supplemental feeding program targeted to · Socioeconomic variables are rarely controlled for malnourished children is a very good example of the difficulties entailed in evaluating the economic · Econometric evaluations are based on a series of impact of a health program. It clearly shows, in questionable assumptions (in part because of particular, how many assumptions--about program the absence of longitudinal data or complete intake, performance, general economic and demo- data sets) graphic conditions over time, etc.--must be made to · The area of benefits are often limited to indi- reach quantitative conclusions. Finally, it shows how vidual ones, omitting social benefits41 (i.e., the the final results crucially depend on whether the benefits from the correction of market failures program is able to set in motion some sort of multi- and of pro-poor redistribution), which in fact plier effect (what we have referred to as a virtuous should be central to any evaluation exercise (see cycle), while avoiding a "substitution effect" (in Introduction) which households adopt a behavior that can poten- · Costing methodologies and the definitions of tially nullify most of its positive potential). benefits are not always well stated. Behrman (1993), reviewing the empirical litera- The lack of a solid empirical base, in the absence ture on the impact of nutritional interventions on of longitudinal studies on the economic impact of productivity and wages through schooling, pointed child health interventions, is one major reason for the out numerous methodological shortcomings of shortcomings. Another one is the small samples and existing studies. Some results seem biased, and many thus the context-specificity of the results derived. are of dubious usefulness for policy purposes. Citing Selowsky (1971), commenting on studies of the rates the estimates by Levin (1986)--based on studies in of return in education, noted that they vary in Indonesia, Kenya, and Mexico--Behrman asserted methodology but also that the differing ages at which that, despite their high economic returns, nutritional school starts and the types of economic sector used as interventions do not deserve public funding, because a reference to compute those rates make them they yield mostly "private" benefits. (Private benefits difficult to compare. are those accruing to the individual rather than to society at large; see Introduction). According to 41. When social benefits are considered, they are limited to medical cost savings. 27 The Economic Benefits of Investing in Child Health When longitudinal data are available, as in the Disentangling the Complex Web of case of the Cebu longitudinal study, other method- Co-Determinants ological problems arise, such as the lack of a control As noted earlier (see figures 5 and 6), it is difficult group. In their economic evaluation of the data from in many instances to disentangle the impact of Cebu, Glewwe, Jacoby, and King (2001) attempted socioeconomic conditions on the one hand, and to build a control group with data collected on the nutritional and health interventions on the other, as children's siblings. To obtain cost benefit estimates they seem to be intricately related. Behrman (1993) for the nutrition program, they also complemented criticized many of the studies he reviewed for not their database with effectiveness and cost data from a controlling the simultaneous effects of socioeconomic program in Narangwal (Punjab, India). Apart from factors on both health and school attainment and the intrinsic problem of mixing data from two very participation. Behrman and Lavy (1994), using data different locations, another problem is that the from Ghana on 1,224 children, and controlling for methodology of transferring (particularly as the study the simultaneity of the impact of socioeconomic applied costs from the Narangwal study to the variables on health and school attainment, showed Philippino context) is not clearly explained. All these that the effects of health on schooling and school methodological shortcuts, which are meant to attainment tend to "evaporate" with time. Yet they compensate for the lack of rigorously controlled data, confirmed that the nutritional and health statuses do obviously limit the scope of the analysis. impact the cognitive capacities at early ages. A few authors have attempted to develop new In Knudsen's analysis (1981) of a nutritional methodologies to evaluate the economic benefits of program in Tamil Nadu, the cost-benefit results investing in child health. In addition to Glewwe, depend crucially on whether the supplemental Jacoby, and King (2001), one other notable example nutrition program is able to stimulate households' of these attempts is the work done by Van der Gaag awareness of malnourished children's needs and thus and Tan (1996), whose work is discussed in section to lead to better nutritional practices within the IV. The authors develop a complex but quite me- households (multiplier effect), or whether it simply chanical methodology to estimate the economic leads households to further reduce the amount of return of Integrated Child Development programs, food given to children benefiting from the nutritional and utilize it to estimate the economic returns of an program (substitution effect).42 ICD program in Bolivia (Programa Integrado de Desarrollo Infantil). They also point out that many possible "intangible" benefits of such a program A Multiplicity of Benefits (reduced crime, increased social participation, higher Numerous types of benefits can be ascribed to any self-esteem, better knowledge of health practices and health intervention. In general, studies have concen- attitudes) are not valued in monetary terms, and their trated on quantifiable benefits such as productivity, consideration would certainly increase the benefit/ wages, and cost savings. However, as Van der Gaag cost ratio even further. 42. To prevent such substitution effects, Knudsen advocates the use of larger rations than those planned in the original program design. 43. The ECCD programs are integrated and comprehensive programs that include education, nutrition, health and general child care. Benefits listed in the table are relative to all these different interventions. 28 V. Analyzing Economic Benefits of Investments in Child Health Table 4. Benefits of ECCD (or ECD) Programs Beneficiary Direct Benefits Indicators of Change Young children Improved health, nutrition, and hygiene Increased chances of survival Reduced morbidity Improved height/weight for age Psycho-social development Improved cognitive development Improved social development Improved emotional development Improved language skills Progress and performance in primary school Higher chance of timely enrollment Less chance of repeating Better performance and more schooling Older children (siblings) Reduced custodial responsibility for younger Greater chance to stay at school and eventually improve siblings earnings Parents and adults Improved employment Caregivers (especially women) freed to seek employ- ment or improve their situations New employment opportunities created by ECCD New markets for ECCD-related goods Changes in general knowledge Better parenting practices Improved nutrition, health, and hygiene practices Preventive medical monitoring Improved psychological well-being Reduced stress for parents and other caregivers Communities Changes in physical environment Improved sanitation, more spaces for play, new multi- purpose facilities Greater social participation Improved solidarity Community projects benefiting all Institutions Improved efficiency Reduced grade repetition and drop-out rates; improved school curriculum Improved effectiveness Better health care Improved capacity Greater coverage Improved practice and content Changes in ability and confidence Society A healthier population Reduced days lost to sickness Reduced suffering for families A more literate, educated populace Greater social participation Reduced violence Cost savings Reduced spending on correctional, special education, and social welfare programs More productive adults Higher productivity and wages Larger economy Source: From IADB (1999a), Karoly et al. (2001), and Myers (1995), with minor additions. Further discussion of these benefits and their definition is available in annex 4. and Tan (1996) noted, several probable benefits not The definition of benefits needs to be better included in evaluations, including social participa- stated and, in many cases, broadened. This has been tion, do create some economic impact in the future. attempted, for example, by reviewers and analysts of 29 The Economic Benefits of Investing in Child Health Early Child Care and Development (ECCD) pro- the demographic transitions, may actually entail new grams, such as that conducted by the Inter-American costs, new burdens on society and individuals. The Development Bank (1999a). In this document, transition from an epidemiological profile where prepared by Ricardo Morán and colleagues, the transmissible and parasitic diseases are widely preva- authors list a variety of benefits with corresponding lent, to a profile where chronic conditions prevail, indicators. Table 4, reproduced from that study, is a requires different approaches to health with far more useful base to develop a more rigorous and systematic costly interventions and programs. Moreover, a modeling of future economic benefits of investing in number of programs, deemed necessary to improve children's health.43 health and nutrition, schooling and school attain- ment, once put in place, entail a recurrent disburse- Clearly, some benefits that reductions in infant ment over the long term. An immunization campaign and child mortality and morbidity bring about are becomes a regular immunization intervention and "intangible" and extremely difficult to translate into part of the recurrent activities of the health system. monetary terms. For instance, a reduction in child Its benefits are seen as permanent, provided the mortality is likely to promote higher confidence and intervention is maintained. social participation among adults, communities, and nations, and to reduce fatalism among adults. As it Similarly, it is expected that in the future, to be does, the vicious cycle of poverty in which vast sustainable, health systems in developing countries populations are caught is interrupted. Such benefits will require an increasing share of national resources are obviously extremely difficult to measure and, and a productive and growing economy. The case of indeed, the empirical literature has not yet attempted Cuba (Barberia and Appaix 2002) shows that a to measure them. Other benefits, such as those sluggish economy is detrimental to the missions of derived from the demographic transition, are rela- health systems. In Cuba, which accomplished its tively easier to evaluate but are rarely included in epidemiological transition very rapidly (in approxi- cost-benefit analyses. mately 15 to 20 years), the cost of the health system is now sky-rocketing; as a proportion of national income, health care costs grew at more than half a Hidden Costs point of GNP each year during the late 1990s In costing, the time profile can make a very (Cárdenas-Rodríguez et al. 2001). significant difference. What seems a fixed cost, Table 5 summarizes our view of the costs and because it does not fluctuate within a certain time benefits accruing to child health interventions, frame, can become a variable cost if the time frame is including hidden costs that can be detected in the extended.44 In a long-term perspective, extending life long run. expectancy, which facilitates the epidemiological and 44. For example, the quantity and cost of equipment and buildings, which are seen as fixed by facilities' managers, are not viewed as such if one stands from the broader perspective of the whole national health system, and even more so, if this perspective includes a long period of time. Demographic, epidemiological, and technological variations do, indeed, greatly influence the necessities and costs of such resources. 30 V. Analyzing Economic Benefits of Investments in Child Health Table 5. Summary of Costs and Benefits of Interventions and Programs Impacting Children's Health and Development (Physical, Mental, and Social) Cost/Benefit Short Term Long Term Cost of intervention/program; Treatment costs decrease if better prevention Decrease of expenditure for transitional programs costs of health care in general is implemented. On the other hand, imple- (family planning for example), and for interventions and mentation or expansion of programs and programs that target infectious diseases. interventions leads to increased costs. Increase in health care expenditure due to the epide- Costs of larger dependant population. Fewer miological/mortality transition, and because long term births are necessary to ensure generational programs and interventions that have proved efficacious renewal. On the negative side, transitionally, remain, including education, health care services, families are more numerous (beginning of immunization. the demographic transition). Lower number of dependants as fertility rates adapt to Furthermore, resources for new health pro- lower mortality rates among children. grams are subtracted from other programs and activities (unless external funds can compensate). Finally, family income is lost because children are subtracted from traditional productive activities, hence a certain resistance from poorer families to consent to the investment (i.e., let their children be diverted into edu- cation). Economic and other main Improvement in cognitive capabilities, school Higher life expectancy, delayed retirement. benefits of the intervention/ participation, and school attainment. program Enhanced human capital and higher productivity. Child in better health, which increases partici- pation of the child in family and social activ- Demographic gift. ities (including productive activities--e.g., domestic and community's production Disease transition, with a lower burden of disease on activities). children. Increased time for productive activities for parents. Note: This table includes only effects of health interventions that seem economically quantifiable. Moreover, it includes both positive and potentially negative effects of health interventions. It includes both short-term and long-term costs and benefits to individuals and society. On the benefits sides, this includes effects that would reduce costs (of programs, health care, special education, correctional and welfare programs, social programs in general) or create a larger economic output. On the costs side, it includes increases in future costs (because of a larger surviving and more educated population requiring more sophisticated health care, education, and other social services). 31 Conclusion T he conclusion to draw from the analysis of It is also clear that acting on determinants and the vast body of literature that has studied consequences of children's ill health would be a the relationship between child health and powerful tool to correct unfavorable conditions for the economy is that investing in child health is a development, particularly to the benefit of poor potentially valuable economic investment. It opens children. Such interventions are not implemented on a dimension of benefits that has not yet been a larger scale for reasons that are mainly not of a appropriately considered by governments or the technical but rather of a political-economic nature. A international community. The literature shows significant share of child mortality and morbidity is that greater investments in child health would concentrated in the poorest countries and among the result in better educated and more productive poorest segments of the population in those coun- adults, and that safeguarding health during tries. These children and their parents are voiceless. childhood is more important than at any other The need to assess returns to investments in the age, because poor health in early years is likely to health sector in a context of tight economic and permanently impair individuals over the course of financial constraints has spurred numerous endeavors their lifetime. to estimate the magnitude of these returns. This By looking at the evidence worldwide, the conclu- paper has attempted to review a number of evalua- sion is clear: millions of children die every year from tions of economic benefits of investments in child largely preventable diseases. This creates an ominous health. These evaluations show the intricacy of burden on families and entails serious economic costs tracking the great variety of possible impacts of each in terms of excess fertility, insufficient investments in health intervention, and that evaluating the full human capital, and other less tangible, but equally benefits of health programs is doubtlessly a complex important, effects. Part of the reason why these costs if not daunting task. Yet, work on standardized (and the potential benefits foregone) are not appro- approaches to cost-benefit analyses has been at- priately factored in most analyses is because they tempted, including the Early Childhood Develop- accrue over the long term, so they are beyond the ment (ECD) "calculator" developed by Van der Gaag short-term horizon under which households, but and Tan (1996, see table 2, p. 29). often also political leaders and international institu- However, to achieve real breakthroughs in the tions, operate. measurement of the economic impact of investing in Empirically, several interventions and programs child health, we need new empirical evidence, based that could significantly contribute to improving child on the direct observation of economic impact over health have been well documented, particularly in time. the area of nutrition, disease control, and education. 33 Bibliography Acheson, D., ed. 1998. Independent Inquiry into Inequalities in ------. 2002. 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Consultation on Child and Adolescent Health and Develop- http://www.worldbank.org/children/crianca/invfut. ment, Stockholm. Zill, N. 1996. "Parental Schooling and Children's Health." Yang, D. 1991. "On the Socio-Economic Benefits of Family Public Health Reports 111(January­February):34­43. Planning Work." Chinese Journal of Population Science 3(1):53­60. 43 Annexes Annex 1. Strategy for Literature Search .................................................................................................................. 46 Annex 2. Identifying the Determinants (Causes) of Ill Health ............................................................................. 47 Annex 3. Preventive and Curative Interventions to Improve Child Health ........................................................... 52 Annex 4. Economic Analysis of Integrated Programs ............................................................................................. 57 45 The Economic Benefits of Investing in Child Health Annex 1. Strategy for Literature Search Literature was searched using a number of on-line · The United Nations (working papers) databases, web sites, as well as publications · The United Nations Children's Fund reviewing literature: · The United Nations Development Programme · POPLINE · JSTOR (economic literature database) · Institut National de l'Information Scientifique et Technique · ECONLIT (economic literature database) · MEDLINE · U.S. Department of Health and Human Services, Centers for Disease Control and · Lexis Nexis Prevention · The World Health Organization (including the Key words used for these searches were: health, Commission on Macroeconomics and Health) child(ren), santé, enfant(s), child health, · The World Bank economic(s), development, economic benefits, health benefits, growth, investment, human · The Inter-American Development Bank capital, family planning, developing country, · Other regional development banks economic costs, health care policy. 46 Annex 2 Annex 2. Identifying the Determinants of Ill Health Traditionally, the literature that investigated the Underlying Determinants causes of child morbidity and mortality followed one This paper focuses on the economic impact of of two leading research perspectives: (1) the biomedi- better (child) health outcomes and argues that in the cal perspective, and (2) the social science perspective. long term poor health is an important co-determi- Biomedical research focused on the immediate biologi- nant of persistent poverty. However, in the short cal causes of individual ill health and death and term, poor health and particularly poor child health emphasized physiological interactions. Social science is certainly a consequence more than a cause of research focused on the association of socioeconomic poverty. The link between poverty and poor health is and behavioral factors with mortality and health one of the more widely studied associations in the status, and their links to overall policy. The two literature, and the evidence shows that there un- approaches have for a long time been confined to doubtedly is a strong positive association between the their disciplinary boundaries: biomedical scientists two, and between poverty and child health outcomes were aware of the limitations of focusing solely on the specifically. biological determinants and medical interventions but tended to relegate socioeconomic factors to The SES-health relationship has been studied background variables of little direct interest. Social from different perspectives and with different meth- science researchers focused on the associations odologies. First, it has been studied in single-country between socioeconomic status (SES) variables and studies looking at the evolution of health and eco- mortality, and tended to avoid investigating underly- nomic indicators over time. For example, Khaldi and ing biological pathways. Ben Mansour (2001) reviewed the association between living conditions and health outcomes in Mosley and Chen (1984) were the first to articu- Tunisia, and showed that the sharp increase in life late a conceptual framework where the biological and expectancy at birth (from 51.1 to 72.4 years) and the social science perspective could be considered decrease in infant mortality (from 138.6 to 24.7 jointly by distinguishing between the proximate and deaths per thousand live births) between 1966 and the underlying determinants of health. They consid- 1998 were due primarily to improvements in living ered SES characteristics alongside cultural factors among conditions. All material well-being indicators mark- the underlying determinants, and they identified 14 edly improved over this period: precarious dwelling, proximate determinants, grouped into five broad for instance, which was prevalent in 1966 (44 categories: maternal fertility, environmental contamina- percent of households), went down to 1.2 percent in tion, nutrient deficiency, injury, and (lack of) personal 1999. During that time, drinkable water became illness control practices. available to over 90 percent of the population, and Since Mosley and Chen's seminal contribution, a electricity to 93 percent. These improvements also vast literature on the underlying and proximate translated into a reduction in stunting of the popula- determinants of health has blossomed. The list of tion under age five from 22.2 percent in 1973 to 8.7 determinants has been refined, but the core concep- percent in 1996. Wasting was also dramatically tual framework developed by Mosley and Chen reduced (from 18.8 percent of under-five population remains the same. to 3.8 percent). 47 The Economic Benefits of Investing in Child Health Second, the SES-health relationship has been variations in health outcomes, and relatively poor studied through comparisons of health outcomes societies exhibit unexpectedly high levels of health among countries at different levels of economic achievements, such as Vietnam, Costa Rica, Sri development. For instance, Gwatkin (forthcoming) Lanka, the state of Kerala in India, and Cuba.2 These compared infant mortality rates in countries at experiences point to the significance of factors other different levels of socioeconomic development and than per capita income in explaining variations in concluded that in the period 1970­90 infant mortal- health outcomes across countries. ity differentials across countries declined in absolute Third, the poverty-health relationship has been terms but increased in relative terms. "While infant examined by focusing on health inequalities across mortality in 1970 was around 6.5 times as high in different economic groups within the same country. the poorest as in the richest countries, it was over 11 Households' SES can be measured by their wealth, times as high by 1990" (Gwatkin 2002, p. 19).1 consumption, expenditures, or, more rarely, income. The conclusion to draw from these cross-country The evidence from these studies shows that higher comparisons is that although there is little doubt infant and under-five mortality rates and prevalence about the important effect that income bears on of malnutrition are concentrated among children individual health, the relationship between average from the poorer segments of society (Gwatkin 2002, national income (measured, for example, by per Wagstaff 2000b, and WHO 2002a). capita GDP) and average national life expectancy, Recent literature has investigated the links child mortality, and other health indicators is by no between poverty and poor health, to determine what means universal or automatic. Countries at similar impact public expenditures or specific pro-poor levels of economic development experience wide 1. The evidence also shows that in the period between 1960 and 1990 income change contributed positively to improvements in the under- five mortality rate, adult mortality rate, as well as life expectancy. The contribution was largest in reducing the male adult mortality rate, and smallest in reducing the under-five mortality rate. 2. For instance, in 1997, Costa Rica had a GDP of $6,650 per capita and a life expectancy equal to 76.0 years, and Cuba had a GDP per capita equal to $3,100 and a life expectancy equal to 75.7 years, comparable to that of the United States. At comparable GDP per capita of approximately $600, life expectancy is 69 years in Honduras, whereas it is 51 years in Senegal (World Bank 1999). 3. For example, in a study on health outcomes for children living with one dollar per day, Wagstaff (2001) concludes that the proportion of public spending over the total of expenditure in health could be a significant determinant of inequality of health outcomes in a popula- tion. The higher the proportion of health spending that comes from public funds, the smaller are health differences across various socioeconomic groups. One reason for this could be that public spending tends to redistribute access to health care by subsidizing it for the poor. Wagstaff (2001) cites countries in Central Asia, such as Kazakhstan (lower-middle income) and Uzbekistan (low income), and very-low-income countries in Africa and Asia, such as Ghana and Bangladesh, where health outcomes for children from poorer and from wealthier segments of the population seem to differ very little. He estimates that an increase of 10 percent in public expenditure per capita can yield a 2.4 percent reduction in infant mortality for the poorest segments of the population (those living with less than $1 per day). These results are not surprising, if we consider that the poor are less able to substitute private care for public care when the latter is lacking or it is of extreme poor quality. Despite the fact that public health services are pro-rich in India, the poor still disproportionably use them relative to private services, particularly for hospital care and public health services such as immunizations (Mahal, Yazbeck, and Peters 2001). 4. The evidence concerning the distribution of health and health care leads to extremely different conclusions in industrialized countries. These countries, at least those (the majority) who opted for mainly public funding (through social insurance or taxation) and public provision of health services, achieved a fairly even distribution of the financial burden and of utilization rates across socioeconomic groups, although there are still pockets of underserved poor (Van Doorslaer 1997). Despite this, inequalities in health status across socioeconomic groups persist; in some countries, they seem to have widened (for the United Kingdom, see Acheson, 1998). By contrast, in the United States, health financing seems more regressive and inequalities across income groups are more pronounced. 48 Annex 2 public policies may bear on it.3 Currently available turn, create a crippling environment for the future evidence shows that in low and middle-income development of children, for girls in particular.5 countries the distribution of health benefits across More recently, the literature has started to socioeconomic groups is highly unequal in favor of recognize that the level of education of the father also the rich.4 is an important predictor of the child's health status. In conclusion, the relationship that ties poverty to Desclaux (1996) showed father's level of education to health is complex, and the relative role that wealth be an important determinant of child malnutrition in and income play--in contrast to other factors such as Burkina Faso. the amount of public expenditures, health services' Finally, among the underlying determinants of accessibility and quality, the level of education, or the health investigated in the literature, it is important ecological setting (climate)--are still disputed. to mention cultural factors. Mosley and Chen Moreover, the wealth/income-health relationship is (1984), for example, cite evidence from Mott (1979) circular, as we saw when we discussed the economic and Poffenberger (1981) that shows the influence of impact of child health. Poverty is one of the principal marriage expectations as a factor of child survival: causes of poor health, but poor health contributes to trapping people into poverty. "Poverty is both a In Kenya, where girls are valued for the bride-price they fundamental cause and an outcome of under nutri- bring, child survival rates are slightly higher for females tion and poor health" (Allen and Gillespie 2001, p. than for males, while in South Asia, where female dowry is the main concern, the reverse is true (Mosley 4). and Chen 1984, pp. 35­36). Another underlying determinant of health widely studied in the literature is education. Because of her Proximate Determinants responsibility for the care of her child during the earliest and most vulnerable stages of her/his life, the A large body of literature singles out nutrition as mother's level of education is a crucial determinant of the most important factor determining child health. child health. Her education level influences her Nutrition deficiency or malnutrition is estimated to choices and her skills in breastfeeding and nutrition, contribute to more than half of premature deaths hygiene, preventive care, and disease treatment. In (Caulfield and Black 2002, and Pelletier et al. 1995). their review of determinants of under-five mortality Nutrition deficiency is a multidimensional in India, Claeson et al. (2000) pointed out the phenomenon whose major aspects include: impact of the status of women and gender differen- tials. Women's low rates of literacy, lack of autonomy, · Low energetic intake (calories) early marriages and childbirth, exposure to sexually · Lack of proteins transmitted infections, low rates of perinatal care, and · Lack of vitamins (A in particular) large numbers of deliveries by untrained personnel, all contribute to women's poorer health status and · Anemia (iron deficiency) higher infant mortality. Domestic violence against · Lack of other nutriments (especially zinc) women is also a contributing factor. These factors, in · Iodine deficiency. 5. A study in Punjab cited by Claeson et al. (2000) shows that, on average, health care expenditure is 2.3 times higher for boys than for girls, while in India a girl is 30 to 50 percent more likely to die between her first and fifth birthday than is a boy. 49 The Economic Benefits of Investing in Child Health The main consequences of nutritional A deficiency would create a significant positive effects deficiencies are: on their individual futures and economic opportuni- ties, as well on their families and the societies in · Low weight at birth (nutritional problems which they live. associated with the mother mainly) At the same time, malnutrition contributes to a · Growth faltering (stunting) during early great extent to maintaining the vicious cycle of ill childhood (first three years of age) health/poverty in which the majority of the poor in · Mental disorders due to iodine deficiency low- and middle-income countries are trapped. (affects cognitive capabilities in particular) Ghosh (1990) shows that malnutrition itself is the · Greater severity and length of childhood result of a variety of determinants, and that it creates diseases (especially ARI, diarrhea, measles, and a fatal cycle, particularly for girls. Malnourished girls hookworm infection). are also those who tend to marry early and have babies who are born in poor conditions and unfavor- Claeson et al. (2000) state that malnutrition is able contexts, often with birth defects and low the main factor retarding improvements in human weight. development and hindering further reductions in infant mortality in India. Rice et al. (2000), review- Environmental contamination is another important ing evidence on the impact of malnutrition on proximate determinant of health outcomes. It infectious diseases, conclude that malnutrition is includes indoor air pollution (particularly due to clearly associated with a higher probability of dying crowding, biomass burning, and smoking), lack of from diarrhea diseases and low-tract respiratory heating, water pollution, and food pollution. infections. Allen and Gillespie (2001) underline that Environmental hazards and malnutrition thus "under-nutrition often starts in uterus and may combine to create a detrimental context for the sound extend throughout the life cycle. It also spans across and safe development of children. Environmental generations: under-nutrition occurs during preg- determinants play a large role in the incidence of nancy, childhood, and adolescence and has a cumula- infectious diseases, while malnutrition increases the tive negative impact on the birth-weight of future severity of infections (Martorell and Ho 1984). babies" (p. 1). Infectious disease (by reducing the child's capacity to The role of malnutrition as a factor in ill health absorb nutrients and by causing anemia) and nutri- underlines the critical role that poverty plays in tion deficiency (by lowering the child's strength and explaining child morbidity and mortality. In develop- ability to resist infectious diseases) reinforce each ing countries, the poorer segments of the population other in a vicious cycle whose outcome is often death. spend a significant share of their total budget (more Closely linked to environmental contamination than 80 percent) just to buy food, and the food they are injuries, considered by Mosley and Chen (1984) are able to provide for themselves and their children as another proximate determinant of health. Exposure is insufficient or of insufficient quality. For example, to injury and to potentially health threatening vitamin A deficiency is one of the more severe nutri- situations are often a consequence of unsafe living tional problems. As Behrman (1993) noted, at the conditions that make children subject to burns, beginning of the 1990s, some 240,000 children traumatisms, and intoxications. Injuries can also be became blind every year in developing countries intentionally inflicted on children, the most extreme because of vitamin A deficiencies; preventing vitamin case being infanticide. 50 Annex 2 A large body of literature also associates child Short pregnancy and birth intervals adversely health with maternal factors (maternal health, mater- affect the mother's as well as her child's health, nal age, birth intervals). Maternal health produces an according to a cross-sectional study of 456,889 important impact on the health of the fetus and of women conducted in countries of Latin America and the newborn, because of the biological links between the Caribbean area, reported by Conde-Agudelo and mother and child during pregnancy and lactation. Belizán (2000). It was evidenced that pregnancy Gelband and Stansfield (2001) remind that up to the intervals shorter than six months (2.8 percent of all first month of life, during which the risk of mortality cases) resulted in significantly higher maternal is very high, most of the health risk is associated with mortality, more prevalent anemia, as well as more perinatal conditions. Those are tightly linked to the frequent third-term bleeding and rupture of mem- mother's own health and its determinants. branes. The health of the child has also been associated Finally, among the proximate determinants of with his/her mother's and more broadly his/her health, Mosley and Chen (1984) and subsequent family's health in the new reproductive health literature assigned special importance to behavioral perspective (Dayaratna et al. 2000). At the beginning factors, and specifically to personal illness control of the 1980s, a new child survival package promoted practices (personal preventive and medical treatment by UNICEF (Cornia 1984) emphasized that increas- practices). These include hygienic practices, ing mothers' age, broadening child spacing (time breastfeeding, traditional behaviors like circumcision, between two consecutive pregnancies), and thus as well as modern preventive treatments such as reducing the fertility rates were critical elements for immunizations. For instance, breastfeeding is a improving children's health status. The program also significant factor contributing to child health, among pioneered a new approach to family planning pro- other things because it reduces the incidence of grams, made explicit and further developed at the diarrhea. Breastfeeding also plays an important role 1994 Cairo Conference on Population and Develop- in the growth of children belonging to socioeconomi- ment. The new agenda for reproductive health cally vulnerable populations. Citing Feacham and interventions focuses on the mother's well-being, Koblinski (1984), Claeson and Waldman (2000) rather than on control of population growth per se. claim that, other factors being equal, non-breastfed Evidence emerging from reproductive health studies babies are 14 times more likely to die from diarrhea in the 1990s clarified the link between child health than those who are breastfed. and the family reproductive health practices. Using Social, cultural, and economic underlying factors data on 3,500 children from urban Brazil, Huttly et largely determine personal illness control practices. al. (1992) show that health outcomes of children conceived within intervals shorter than six months after their siblings were born are worse than those of children born 24 to 71 months after the prior birth. 51 The Economic Benefits of Investing in Child Health Annex 3. Preventive and Curative Interventions to Improve Child Health The government can strongly influence several of status of children as discussed in the text. Fogel the more important underlying and proximate (1997) showed that improvements in nutritional determinants of health. For instance, significant status were instrumental in the historical increase in improvements can be achieved in sanitation, access to life expectancy among Western European populations water, and electricity, which produce a long-term over the last two centuries.1 Governments can act to impact on the prevalence of diseases that mostly improve nutrition in a variety of ways, not least by affect children. Briscoe (1987) argues that in the past promoting innovations in agriculture, by micro- water and sanitation projects were not properly credit programs, by favoring a better use and redistri- considered by the "child survival revolution" pro- bution of land in favor of the poor, by information moted by UNICEF and the U.S. Agency for Interna- campaigns on nutrition, or by directly financing/ tional Development because they were deemed as not managing nutritional programs for the poor. A vast cost-effective. More recent evidence is changing that literature developed since the early 1980s has proved negative perspective. Reviews of such evidence on the that appropriately designed and implemented impact of access to water and sanitation by Esrey and nutritional programs are among the more cost- colleagues (1985 and 1991) showed a median effective interventions. For example, in Chile, distri- reduction in diarrheal morbidity of 20 to 26 percent bution of milk supplemented with ferrous sulfate and associated with better water and sanitation facilities. vitamin C was instrumental in eliminating anemia Moreover, improved anthropometric indicators were among newborns--reducing it from 27 percent of recorded in connection with water and sanitation newborns to none (Allen and Gillespie 2001). interventions. Nutritional programs such as the Centre de Hygiene promotion is another important factor Récupération et d'Education Nutritionnelle (CREN) contributing to reduce health risks for children, in Burkina Faso described by Desclaux (1996) also particularly diarrhea. Combined with sanitation and include health education.2 Table A3-1 summarizes water, hygiene promotion constitutes an effective the major interventions that target malnutrition and prevention against diarrhea. In a review of hygiene their effects on children and mothers. promotion conducted by Huttly et al. (1997), the Immunization programs are another extremely authors found that hand washing alone could lead to cost-effective preventive measure to reduce child a 35 percent decrease in diarrheal morbidity. morbidity and mortality. The Expanded Program on Since malnutrition is a major proximate determi- Immunization (EPI) aims to cover all vaccine- nant of health outcomes, programs and interventions preventable diseases affecting children (including that specifically aim to combat malnutrition are measles, pertussis, polio, diphtheria and tetanus). likely to yield significant improvements in the health 1. He shows that economic development and better health and nutrition patterns across the population reinforced each other in a virtuous cycle. Nutritional intakes and life expectancies in France and England at the end of the eighteenth century were similar to what they are now in low-income countries such as Pakistan. The improvement in nutritional status registered ever since, first in England then in France, translated into increased height, improved height for weight, improved work capacity, and further increases in food availability. 2. People trust the work done by these nutritional centers because they have witnessed the positive changes in health status achieved through them. However, the HIV/AIDS epidemic has altered the work of these centers because of the stigma that surrounds HIV- infected people, including children, even among health workers. (Desclaux 1996). 52 Annex 3 If nutrition interventions, immunizations, and Figures A3-1 and A3-2 provide a synthetic other preventive measures do decrease health risks, summary of the different preventive and treatment diseases still occur that have to be tackled with interventions available to improve child health. The effective treatment. As in prevention, several inexpen- first figure uses the life-cycle approach presented in sive interventions are available for disease treatment. figure 1 in the text, adding a specific set of interven- These include oral rehydration therapy (effective for tion to address the health risks and diseases specific approximately 95 percent of all cases of acute watery to each period in the early development of the diarrhea) and antibacterial treatments (against human being. The second figure utilizes the health pneumonia) that have proven extremely effective in development cycle in figure 5 in the text, and reducing infant and child mortality. In their review of illustrates the different interventions available to interventions that can contribute to the reduction of influence underlying and proximate determinants of under-five mortality in low- and middle-income child health, as well as specific prevention and countries, Gelband and Stansfield (2001) note that treatment interventions to correct adverse health case-management of ARI can reduce mortality by an outcomes. average of 80 percent for a set of specific diseases.3 In addition to specific interventions to tackle Malaria can be successfully managed both by specific conditions, integrated programs have been preventive measures such as bednets and by anti- designed in recent years that include case manage- malarial treatment such as sulphadoxine-py- ment of various diseases along with health education rimethamine (Gelband and Stansfield 2001). meant to impact household behaviors, as well as to Table A3-1. Nutritional Programs and Their Impact Malnutrition Issues Interventions Effects/Benefits Malnutrition is associated Nutritional interventions targeting the mother Increases weight at birth with over half of the 11 (caloric and nutriment supplements) Reduces risk of growth handicaps during early childhood million deaths among children ´ 88% of pregnant women suffer from aged under five, annually. anemia in Asia Main problems associated Iron supplements given to children (to correct Reduces risk of malaria and hookworm infections with malnutrition: anemia) Improves cognitive capacities Improves motor development ´ Low weight at birth ´ Growth handicaps during Vitamin A supplements Reduces ocular lesions early childhood (stunting, Reduces mortality due to diarrheas and measles wasting) Increases hemoglobin synthesis ´ Anemia ´ Mental and physical dis- Vitamin B12 supplements Improves growth of cognitive capacities orders associated with iodine deficiency Zinc supplements Enhances growth in stunted children ´ Vitamin A deficiency Iodine supplements Reduces infant mortality Prevents cretinism Reduces goiter Improves mental and physical functions Source: Allen and Gillespie (2001). 3. This is actually comparable to what can be achieved with nutritional interventions on an even broader array of ARI-related conditions. 53 The Economic Benefits of Investing in Child Health improve the quality and efficiency of health care reported by Parker and Reinke (1983). They show services. The evidence shows that they are indeed that the provision of health services to children extremely effective. For instance, Mother and Child reduced infant mortality by more than 35 percent Health programs associated with family planning and child mortality by more than 60 percent, where programs proved effective in Narangwal (India), as attention to mothers' health was included. The average annual number of days of illness per child was reduced by 16 percent for infants, and by 21 Figure A3-1. Main Interventions Associated with Each Phase percent for children one to three years of age in of the Life-Cycle villages where child care was available along with Main interventions in pregnancy and early life family planning activities. Pregnancy, birth, and Neonatal period Other tools to increase child survival and future perinatal period · Essential newborn care economic returns include education programs · Antenatal care · Breastfeeding counseling · Essential obstetric care channeled through the preschool system, including · Immunization · Essential family planning · Management of illness early education and child-care. Randolph (1994) · Nutritional interventions · Community mobilization shows that child preschool care can be effectively for safer home births Infancy used to provide nutritional supplements, health care, · Breastfeeding counseling · Nutritional interventions and immunization to children, as well as basic health · Management of illness and hygiene education. Such preschool programs · Care for development · Immunization have secondary effects on parents, as health education · Other preventive Birth measures can be shared with them through the program. An 7days integrated early child development program in 28 days Bolivia (Programa Integrado de Desarrollo Infantil) shows that, indeed, access for children from poor 1 year sectors of the population caused a particularly strong positive effect on their health status and school Main interventions in childhood, adolescence, participation (Van der Gaag and Tan 1996). and reproductive period Schooling is another means of correcting intellec- Reproductive period Childhood · Essential reproductive · Nutrition interventions tual growth handicaps that may have resulted from health services · Disease prevention and malnutrition. Glewwe and Jacoby (1995) show that · Contraceptive services management · STD care · Care for development the length of schooling is an important factor in that · Accident prevention correction, but also point out that children's atten- dance is precisely affected by their nutritional status, as evidence from Ghana shows. Therefore, nutritional 20 years supplements should be coupled with education, 5 years 10 years particularly for children suffering from malnutrition. This is another example of why integrated programs Adolescence may be a solution--at least theoretically--to the very School age · Adolescent-friendly health services complex links between health and development; · Interventions to promote a safe and · School health programs integrated programs attempt to cover as many supportive environment · Nutrition interventions determinants of health as possible in recognition of · Adolescent development the cyclical nature of the health-development rela- Source: World Bank (2001a). tionship. 54 Annex 3 In general, cost-effectiveness estimates such as ability issues critical to the success of any child those presented here cannot be considered valid in health program goes beyond the scope of this paper. different settings, because they rely on a host of For instance, Gonzalez (1991) reports on the difficul- concrete organization and contextual factors that are ties a school health education program in the Philip- likely to vary enormously across places. A discussion pines had in attracting children; families were of the several concrete implementation and sustain- reluctant to let their children attend school both Figure A3-2. Child Health Determinants and Consequences (with entry points for programs and interventions aiming at improving children's fate) Programs Impacting Proximate Determinants, Health Outcomes, and Consequences Determinants of Health Prevention: Proximate Determinants Immunization Prenatal care Interventions Maternal Breastfeeding Impacting Complementary feeding (calories) proximate Nutritional complements (essentially iron, vitamin A, zinc) determinants Environmental Treatments: · Promotion of contamination · Integrated programs (EPI, IMCI, IMPB) domestic · Management of malnutrition (e.g., CREN in Burkina Faso) measures · Treatments of particular conditions (malaria, diarrheas, (refuse Hazardous/unhealthy ARI,AIDS, helmynthic diseases) collection, practices Social programs: hygiene, · Day care ventilation) · Schooling · Nutritional Nutritional supplements deficiencies · Reproductive Health Outcomes Secondary Effects Secondary Effects health and Factors that of Child Illness of Child Illness Hamper (Consequences (Consequences Child's Development during Childhood) during Adulthood) Underlying Determinants ! Illness (high Reduced ! Lower Economically morbidity and participation: productivity and Impacting poor family mortality) ! In schooling income underlying ! Growth ! In social activities ! Reduced or determinants handicaps ! In productive hampered social · Education Socially marginalized ! Mental and ! activities (present participation household/population (maternal and intellectual and future) ! No return visible paternal) handicaps for household's · Improve ! Cognitive investments in infrastructure Poor physical infrastructure handicaps child health (health (no sanitation, etc.) Mental and social ! Demographic services, water handicaps; impaired consequences & sanitation, human development (larger families roads, etc.) Weak social position of with more the child within the family frequent births and deaths) Education & social position of the mother 55 The Economic Benefits of Investing in Child Health because the children were needed for productive tasks nied by immediate benefits that families can visual- and because they could not envision the long-term ize, experience, and control. benefits of schooling. Especially among the poorest Supply-side incentives are needed as well. Recent families, the primary concern was to meet short-term analysis has tried to break new ground on how to necessities. The education program paid no attention involve the private sector more effectively (Waters, to such demand factors and largely failed to attract Hatt, and Axelsson 2002) in child health promotion, the poor. Gonzalez, along with others, concluded particularly among the poor, and on how to sharpen that increased health and education expenditure is incentives for patients and providers for improving not enough, particularly for the poorest, for whom accessibility and quality of service in the public sector short-term benefits such as school meals need to be (Belli 2002). A general conclusion from all these provided that can render long-term investments more studies is that the role of government in protecting attractive. Equally important is giving communities a children's health needs to be strengthened and sense of ownership of the new services provided to transformed. (See also "World Development Report them. Analysts of family planning programs have 2004: Making Services Work for the Poor," an come to similar conclusions; Ramakanth (1986) unpublished draft available at http:// reported that, in order for family planning to be econ.worldbank.org/wdr/wdr2004.) accepted and viewed positively, it must be accompa- 56 Annex 4 Annex 4. Economic Analysis of Integrated Programs Over the last decade a large number of integrated year, multiphase expansion of Progresa that will programs, which include millions of families in new include urban areas. The program has now being education, nutrition, and health services, have been replicated throughout Latin America, including introduced. Honduras, Argentina, Brazil, Nicaragua and Colom- bia. A large body of evidence and analysis is now available for a few of these integrated or comprehen- The main goal of Progresa and other similar sive programs, including programs in India (in integrated or comprehensive programs is to reduce Aryana and Tamil Nadu states), Colombia (Promesa), poverty. The Mexican program, specifically, provides Mexico (Progresa--the largest such program in the families with financial aid linked to school participa- world), and Turkey (the Early Enrichment Project). tion of children 8 to18 years of age and visits to These programs have included rigorous evaluation health centers. It also provides nutritional supple- studies (with randomized controlled samples) that ments to children under five and health care and show improved cognitive development, higher school health information (through pláticas or informative enrolments (up to 100 percent in the case of talks) to both children and their mother (perinatal Promesa, according to Young 2002), lower dropouts care). Monetary transfers--given to mothers-- and repetitions, better health and nutritional status, amount to one fifth of families' levels of consumption and reduced social inequality for the children exposed prior to transfers (Coady 2000). to them. Integrated programs have also brought It is estimated that integrated programs such as about an indirect positive effect on household Progresa bring about an economic benefit to indi- income, as improved child health allows mothers to viduals in the form of higher income through four spend more time at work and to participate more in channels (Behrman and Hoddinott 2000): the labor force.1 · Increased cognitive capacities; The Mexican program Progresa--now called Oportunidades--was launched in August 1997 and · Increased height, that directly influences from the start included control groups and evaluation earnings; protocols that allowed thorough analyses of its · Higher education degrees obtained; immediate and medium-term effects. Progresa · Lower repetition/drop-out rates (or lower age at combines education, health, and nutrition interven- which children complete school). tions. In 2000, it covered 2.6 million poor Mexican families dwelling in rural areas, or 40 percent of rural Evaluations of Progresa have identified the families and one in nine families in Mexico (Skoufias following specific education, health, and nutrition 2001). In 1999, its budget was equivalent to 0.2 results. percent of the Mexican GDP, or $777 million ($960 Education million according to Gertler 2000). Recently, the Inter-American Development Bank granted a $1 · An increase in secondary school participation billion loan to Mexico as part of a $4.8 billion six- after three years of 12 percent for girls and 6 1. However, some of that increased income is offset by lost income from children as they now spend time (or more time) in school. 57 The Economic Benefits of Investing in Child Health percent for boys (who were already character- Reviews of ECD programs in the United States ized by a higher participation), according to (Karoly et al. 2001), such as the High/Scope Perry calculations by Coady (2000) and confirmed by Preschool Project or the National Institute of Child an evaluation done by Schultz (2000). This Health and Human Development study in Early increased participation leads, according to Child Care, have attempted to quantify these pro- various evaluations, to an increase equal to 0.6 grams' future economic return to beneficiaries. to 0.7 years (0.72 for girls and 0.64 for boys) of Though the health component of the ECD programs school and to 0.4 higher grades, according to reviewed is generally secondary if not negligible, the Behrman (2001) and Schultz (2000). processes and results of the evaluations can be useful in identifying methodologies to evaluate costs and Health benefits of interventions and programs, particularly · Up to a doubling in visits to health centers for those that include a variety of components. families included in the program (Gertler Table A4-1 shows the types and values of benefits 2000). that have been monetarily estimated for the High/ · A decrease in the incidence of diseases by 12 Scope Perry Preschool program, which covered 58 percent for children under two and by 11 African-American children (with 65 children in a percent for children between three and five control group) from age three to five (Karoly et al. years of age (Gertler 2000). 2001). These children received center-based educa- Nutrition tion (2.5 hours per day) as well as 90-minute home visits from educators. Participants in the program as · An increase in food consumption of 7.1 percent (in calories) after two years, which corresponded to an increase in expenses equal to 10.6 percent. An attempt to evaluate the efficiency of the Table A4-1. Costs and Benefits of the Perry Preschool program conducted by Coady (2000) was limited to Program the ratio of administrative costs to monetary transfers Item Value and what costs would be incurred per beneficiary Program costs 12,148 under various alternative selection and distribution scenarios. A cost-benefit analysis of the program that Savings to government 25,437 Reduction in education services 6,365 would include future economic benefits could use Reduction in health servicesa -- estimates of return to education in Mexico, which has Taxes from increased employment 6,566 Reduction in welfare cost 2,310 been evaluated to be 5 percent for each year of Reduction in criminal justice cost 10,195 primary school and12 percent for each year of Additional monetary benefits 24,535 secondary school (Parker and Skoufias 2000). Increase in participant income net of welfare loss 13,846 Behrman and Hoddinott (2000) attempted to isolate Reduction in tangible losses to crime victims 10,690 the future economic benefits of only the nutritional Total benefits 49,972 component of Progresa and estimated that it might Net benefits 37,824 trigger an increase in future wages (at adult age) among Note: Values are expressed in 1996 U.S. dollars per child, with a 4% beneficiary children of 2.9 percent. This does not discount rate. All costs and benefits are "due to child." a include the effects of better nutrition on schooling, Not evaluated. which, in turn, will have positive effects on beneficia- Source: Karoly et al. (2001). ries' future productivity and wages. 58 Annex 4 well as children from the control group were subse- · Increased taxes from higher employment quently followed until age 27. A number of potential projected through age 65 based on employment benefits that accrued to the program, including and earnings data at age 27 differences in IQ tests, were not valued economically · Less time spent on welfare projected through and, therefore, are not included in the table. The age 65 based on welfare utilization observed main economically quantifiable benefits were (Karoly through age 27 et al. 2001, p. 55): · Reduced criminal justice system costs projected · Reduced use of special education and fewer for their lifetime based on outcomes observed years of grade retention (net of increased through age 27. education costs due to greater educational achievement) through age 27 59 About this series... This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank's Human Development Network. The papers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. 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