Aggregate Health Expenditures, National Income, and Institutions for Private Property

Abstract

Health expenditures scholars argue that cross-country variation in health spending is largely attributable to differences in national income. Institutions and commitment scholars, on the other hand, find that institutions for private property (e.g., systems of checks and balances) can significantly expand an economy's production possibilities. I synthesize and extend these results by employing new methods to examine a large cross-country dataset of health expenditures, national incomes, and institutional indexes. My main result - i.e., that institutions for private property exhibit a more fundamental relationship with health expenditures than does national income - should interest a wide audience. First, health expenditures scholars may be interested in the relatively careful estimates of aggregate incomes' relationship to health spending. Second, institutions and commitment scholars should be interested in this result's ability to evidence institutions' primacy in a heretofore overlooked, but theoretically and substantively attractive, application. Finally, health policy entrepreneurs may find important the implication that reforming governance structures can be more productive for advancing health than is directly funding associated services.