Preston curve
Encyclopedia
The Preston curve is an empirical
cross-section
relationship between life expectancy
and real per capita income
. It is named after Samuel H. Preston
(1975) who described it in his article "The Changing Relation between Mortality
and Level of Economic Development
" in the journal Population Studies in 1975. Preston studied the relationship for the 1900s, 1930s and the 1960s and found it held for each of the three decades. More recent work has updated this research.
to income in terms of life expectancy.
A further significant finding of Preston's study was that the curve has shifted upwards during the 20th century. This means that life expectancy has increased in most countries, independently of changes in income. Preston credited education, better technology, vaccinations, improved provision of public health services, oral rehydration therapy
and better nutrition
with these exogenous improvements in health. According to Preston, the independent increases in life expectancy have been greatest in the poor countries, although he also believed that a good portion of the potential gains from better medical technology have not been realized. Furthermore, several poor countries in Sub-Saharan Africa
have actually seen declines in life expectancy in the 1990s and 2000s as a result of the HIV
/AIDS
epidemic, even if their per capita incomes have increased during this time.
Overall Preston found that improvements in health technology (the upwards shifts in the curve) accounted for 75% to 90% of the increase in life expectancy, while income growth (movement along the curve) was responsible for the rest.
Analysis of more recent data, for example by Michael Spence
and Maureen Lewis, suggests that the "fit
" of the relationship has gotten stronger in recent decades since Preston's study.
While the relationship between income and life expectancy is log linear on average, any one individual country can lie above or below curve. Those below the curve, such as South Africa
or Zimbabwe
, have life expectancy levels that are lower than would be predicted based on per capita income alone. Countries above the curve, such as Tajikistan
, have life expectancies that are exceptionally high given their level of economic development. In 2000, the US data lay just below the curve, indicating that it had a slightly lower life expectancy than other rich countries.
If the relationship is estimated with nonparametric regression
then it produces a version of the curve which has a "hinge"; a kink in the relationship at which point the slope of the regression equation falls significantly. This point occurs around the per capita income level of $2,045 (data for the year 2000) which is about the per capita income level of India. This level of income is generally associated with a crossing of a "epidemiological transition", where countries change from having most of their mortality occur due to infant mortality to that due to old age mortality, and from prevalence of infectious diseases to that of chronic diseases.
implies that a transfer of income from the rich to the poor would increase the average health of a society. However, this policy prescription will have this effect only if the relationship between income and health is causal - higher income causes longer life expectancy (see below). If the relationship is driven by other factors, if it is spurious, or if it is in fact health that leads to higher income, then this policy outcome will no longer be true.
The existence of the Preston curve has been used by Lant Pritchett
and Larry Summers to argue that poor countries should focus on economic growth
, and that health improvements will come about on their own as a result of increases in income. According to these authors, in 1990, more than half a million child deaths in the world could have been prevented with better economic performance. However, the upward shifts of the Preston curve still imply that the main portion of gains in life expectancy has come about as a result of improved health technology rather than just increases in per capita income. Preston did, however, acknowledge that, for the poorest countries, economic growth may be necessary for improvements in health, as even the most inexpensive technologies have a cost of adoption that poor countries may not be able to afford.
Preston's work has also contributed to the broadening of the definition of economic development
. Gary Becker
et al. have included longevity in a more general welfare measure and have illustrated that increases in life expectancy have made up a large portion of increases in overall global welfare since the 1960s. In the same work they also found that while cross-country incomes have diverged, the distribution of health has converged.
and longitudinal data within individual countries. In particular, per capita incomes between countries have generally diverged over time, while life expectancies, and other health indicators such as the infant mortality rates, have converged (this trend was interrupted in the 1990s with the outbreak of the AIDS epidemic in Sub-Saharan Africa
). This suggests that over time changes in income may have no impact on health or even be negatively related.
is that it does not necessarily imply that the causality
runs from income to health. It could actually be that better health, as proxied by life expectancy, contributes to higher incomes, rather than vice versa. Better health can increase incomes because healthier individuals tend to be more productive than sick ones; on average they work harder, longer and are more capable of focusing efficiently on production tasks. Furthermore, better health may affect not just the level of income but also its growth rate through its effect on education. Healthier children spend more time at school and learn faster, thus acquiring more human capital
which translates into higher growth rates of incomes later in life. Diseases such as malaria can short circuit these processes. Likewise there is evidence that more healthy individuals save more and thus contribute to the faster accumulation of physical capital of an economy. Jeffrey Sachs
in particular has emphasized the role that the disease
burden has played in the impoverishment of countries located in the tropical zones.
The problem of reverse causality between health and income means that any estimates of the impact of income on life expectancy could mistakenly reflect the influence of life expectancy (more generically, health) on income instead. As such, studies which do not account for this potential two-way causation may overestimate the importance of income for life expectancy. In economic research, this kind of problem has traditionally been dealt with through the use of instrumental variable
s which allow the researcher to separate out one effect from another. In order for this strategy to succeed however an "instrument" – a variable which is correlated with per capita income but is not correlated with the error term in the linear regression
– has to be found. However, since any variable which is likely to be correlated with income is also likely to be highly correlated with health and life expectancy this is a difficult task. Some research suggests that in low and middle-income countries, the causality does indeed go from income to health, while the opposite is true for rich countries.
Empirical
The word empirical denotes information gained by means of observation or experimentation. Empirical data are data produced by an experiment or observation....
cross-section
Cross-sectional data
Cross-sectional data or cross section in statistics and econometrics is a type of one-dimensional data set. Cross-sectional data refers to data collected by observing many subjects at the same point of time, or without regard to differences in time...
relationship between life expectancy
Life expectancy
Life expectancy is the expected number of years of life remaining at a given age. It is denoted by ex, which means the average number of subsequent years of life for someone now aged x, according to a particular mortality experience...
and real per capita income
Per capita income
Per capita income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate and dividing it by the total population...
. It is named after Samuel H. Preston
Samuel H. Preston
Samuel H. Preston is an American demographer and sociologist. He is currently a Fredrick J. Warren Professor of Demography at the University of Pennsylvania....
(1975) who described it in his article "The Changing Relation between Mortality
Death
Death is the permanent termination of the biological functions that sustain a living organism. Phenomena which commonly bring about death include old age, predation, malnutrition, disease, and accidents or trauma resulting in terminal injury....
and Level of Economic Development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
" in the journal Population Studies in 1975. Preston studied the relationship for the 1900s, 1930s and the 1960s and found it held for each of the three decades. More recent work has updated this research.
The relationship between life expectancy and income
The Preston curve indicates that individuals born in richer countries, on average, can expect to live longer than those born in poor countries. However, the link between income and life expectancy flattens out. This means that at low levels of per capita income, further increases in income are associated with large gains in life expectancy, but at high levels of income, increased income has little associated change in life expectancy. In other words, if the relationship is interpreted as being causal, then there are diminishing returnsDiminishing returns
In economics, diminishing returns is the decrease in the marginal output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.The law of diminishing returns In economics, diminishing returns (also...
to income in terms of life expectancy.
A further significant finding of Preston's study was that the curve has shifted upwards during the 20th century. This means that life expectancy has increased in most countries, independently of changes in income. Preston credited education, better technology, vaccinations, improved provision of public health services, oral rehydration therapy
Oral rehydration therapy
Oral rehydration therapy is a simple treatment for dehydration associated with diarrhoea, particularly gastroenteritis or gastroenteropathy, such as that caused by cholera or rotavirus. ORT consists of a solution of salts and sugars which is taken by mouth...
and better nutrition
Nutrition
Nutrition is the provision, to cells and organisms, of the materials necessary to support life. Many common health problems can be prevented or alleviated with a healthy diet....
with these exogenous improvements in health. According to Preston, the independent increases in life expectancy have been greatest in the poor countries, although he also believed that a good portion of the potential gains from better medical technology have not been realized. Furthermore, several poor countries in Sub-Saharan Africa
Sub-Saharan Africa
Sub-Saharan Africa as a geographical term refers to the area of the African continent which lies south of the Sahara. A political definition of Sub-Saharan Africa, instead, covers all African countries which are fully or partially located south of the Sahara...
have actually seen declines in life expectancy in the 1990s and 2000s as a result of the HIV
HIV
Human immunodeficiency virus is a lentivirus that causes acquired immunodeficiency syndrome , a condition in humans in which progressive failure of the immune system allows life-threatening opportunistic infections and cancers to thrive...
/AIDS
AIDS
Acquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...
epidemic, even if their per capita incomes have increased during this time.
Overall Preston found that improvements in health technology (the upwards shifts in the curve) accounted for 75% to 90% of the increase in life expectancy, while income growth (movement along the curve) was responsible for the rest.
Analysis of more recent data, for example by Michael Spence
Michael Spence
Andrew Michael Spence is an American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, along with George A. Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development. He conducted this research while at Harvard University...
and Maureen Lewis, suggests that the "fit
Goodness of fit
The goodness of fit of a statistical model describes how well it fits a set of observations. Measures of goodness of fit typically summarize the discrepancy between observed values and the values expected under the model in question. Such measures can be used in statistical hypothesis testing, e.g...
" of the relationship has gotten stronger in recent decades since Preston's study.
While the relationship between income and life expectancy is log linear on average, any one individual country can lie above or below curve. Those below the curve, such as South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
or Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
, have life expectancy levels that are lower than would be predicted based on per capita income alone. Countries above the curve, such as Tajikistan
Tajikistan
Tajikistan , officially the Republic of Tajikistan , is a mountainous landlocked country in Central Asia. Afghanistan borders it to the south, Uzbekistan to the west, Kyrgyzstan to the north, and China to the east....
, have life expectancies that are exceptionally high given their level of economic development. In 2000, the US data lay just below the curve, indicating that it had a slightly lower life expectancy than other rich countries.
If the relationship is estimated with nonparametric regression
Nonparametric regression
Nonparametric regression is a form of regression analysis in which the predictor does not take a predetermined form but is constructed according to information derived from the data...
then it produces a version of the curve which has a "hinge"; a kink in the relationship at which point the slope of the regression equation falls significantly. This point occurs around the per capita income level of $2,045 (data for the year 2000) which is about the per capita income level of India. This level of income is generally associated with a crossing of a "epidemiological transition", where countries change from having most of their mortality occur due to infant mortality to that due to old age mortality, and from prevalence of infectious diseases to that of chronic diseases.
Implications
The fact that the relationship between income and health is concaveConcave function
In mathematics, a concave function is the negative of a convex function. A concave function is also synonymously called concave downwards, concave down, convex upwards, convex cap or upper convex.-Definition:...
implies that a transfer of income from the rich to the poor would increase the average health of a society. However, this policy prescription will have this effect only if the relationship between income and health is causal - higher income causes longer life expectancy (see below). If the relationship is driven by other factors, if it is spurious, or if it is in fact health that leads to higher income, then this policy outcome will no longer be true.
The existence of the Preston curve has been used by Lant Pritchett
Lant Pritchett
-Biography:He was born in Utah in 1959 and raised in Boise, Idaho. He graduated from Brigham Young University in 1983 with a B.S. in Economics, after serving a mission for The Church of Jesus Christ of Latter-day Saints in Argentina...
and Larry Summers to argue that poor countries should focus on economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, and that health improvements will come about on their own as a result of increases in income. According to these authors, in 1990, more than half a million child deaths in the world could have been prevented with better economic performance. However, the upward shifts of the Preston curve still imply that the main portion of gains in life expectancy has come about as a result of improved health technology rather than just increases in per capita income. Preston did, however, acknowledge that, for the poorest countries, economic growth may be necessary for improvements in health, as even the most inexpensive technologies have a cost of adoption that poor countries may not be able to afford.
Preston's work has also contributed to the broadening of the definition of economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
. Gary Becker
Gary Becker
Gary Stanley Becker is an American economist. He is a professor of economics, sociology at the University of Chicago and a professor at the Booth School of Business. He was awarded the Nobel Memorial Prize in Economic Sciences in 1992, and received the United States' Presidential Medal of Freedom...
et al. have included longevity in a more general welfare measure and have illustrated that increases in life expectancy have made up a large portion of increases in overall global welfare since the 1960s. In the same work they also found that while cross-country incomes have diverged, the distribution of health has converged.
Lack of longitudinal evidence
The Preston curve is a relationship found in cross-country data - that is, it holds for a sample of countries taken at a particular point in time. Some research however suggests that a similar relationship does not hold in time seriesTime series
In statistics, signal processing, econometrics and mathematical finance, a time series is a sequence of data points, measured typically at successive times spaced at uniform time intervals. Examples of time series are the daily closing value of the Dow Jones index or the annual flow volume of the...
and longitudinal data within individual countries. In particular, per capita incomes between countries have generally diverged over time, while life expectancies, and other health indicators such as the infant mortality rates, have converged (this trend was interrupted in the 1990s with the outbreak of the AIDS epidemic in Sub-Saharan Africa
Sub-Saharan Africa
Sub-Saharan Africa as a geographical term refers to the area of the African continent which lies south of the Sahara. A political definition of Sub-Saharan Africa, instead, covers all African countries which are fully or partially located south of the Sahara...
). This suggests that over time changes in income may have no impact on health or even be negatively related.
Causality
A further limitation of the correlationCorrelation
In statistics, dependence refers to any statistical relationship between two random variables or two sets of data. Correlation refers to any of a broad class of statistical relationships involving dependence....
is that it does not necessarily imply that the causality
Causality
Causality is the relationship between an event and a second event , where the second event is understood as a consequence of the first....
runs from income to health. It could actually be that better health, as proxied by life expectancy, contributes to higher incomes, rather than vice versa. Better health can increase incomes because healthier individuals tend to be more productive than sick ones; on average they work harder, longer and are more capable of focusing efficiently on production tasks. Furthermore, better health may affect not just the level of income but also its growth rate through its effect on education. Healthier children spend more time at school and learn faster, thus acquiring more human capital
Human capital
Human capitalis the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience...
which translates into higher growth rates of incomes later in life. Diseases such as malaria can short circuit these processes. Likewise there is evidence that more healthy individuals save more and thus contribute to the faster accumulation of physical capital of an economy. Jeffrey Sachs
Jeffrey Sachs
Jeffrey David Sachs is an American economist and Director of The Earth Institute at Columbia University. One of the youngest economics professors in the history of Harvard University, Sachs became known for his role as an adviser to Eastern European and developing country governments in the...
in particular has emphasized the role that the disease
Disease
A disease is an abnormal condition affecting the body of an organism. It is often construed to be a medical condition associated with specific symptoms and signs. It may be caused by external factors, such as infectious disease, or it may be caused by internal dysfunctions, such as autoimmune...
burden has played in the impoverishment of countries located in the tropical zones.
The problem of reverse causality between health and income means that any estimates of the impact of income on life expectancy could mistakenly reflect the influence of life expectancy (more generically, health) on income instead. As such, studies which do not account for this potential two-way causation may overestimate the importance of income for life expectancy. In economic research, this kind of problem has traditionally been dealt with through the use of instrumental variable
Instrumental variable
In statistics, econometrics, epidemiology and related disciplines, the method of instrumental variables is used to estimate causal relationships when controlled experiments are not feasible....
s which allow the researcher to separate out one effect from another. In order for this strategy to succeed however an "instrument" – a variable which is correlated with per capita income but is not correlated with the error term in the linear regression
Linear regression
In statistics, linear regression is an approach to modeling the relationship between a scalar variable y and one or more explanatory variables denoted X. The case of one explanatory variable is called simple regression...
– has to be found. However, since any variable which is likely to be correlated with income is also likely to be highly correlated with health and life expectancy this is a difficult task. Some research suggests that in low and middle-income countries, the causality does indeed go from income to health, while the opposite is true for rich countries.