Volume 6, Number 1 (Winter) 1971
Stewart, Jr., Charles T. 1971. "Allocation of Resources to Health." Journal of Human Resources 6(1):103-122.
A fourfold classification of resources devoted to health is employed: treatment, prevention, information, and research. The typical relation between treatment and prevention is competitive, whereas that between information and research is complementary, as is the relation between the two pairs of subsystems. The four subsystems also differ in scale effects and in their temporal and spatial characteristics, affecting allocative choice between them. Using life expectancy as the dependent variable, an attempt was made to measure the significance of treatment variables, literacy (proxy for information), and potable water (proxy for prevention) for all nations in the Western Hemisphere. Both literacy and potable water proved highly significant, whereas none of the treatment variables were significantly related to life expectancy. Data from the United States also suggest a low marginal productivity of medical treatment in terms of life expectancy. Alternative explanations are discussed, together with indicated reallocation of resources away from medical treatment.
The author is Professor of Economics, The George Washington University. The writer gratefully acknowledges the assistance of The George Washington University Committee on Research, and the useful suggestions of Sheldon Haber.
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