Relationship Between Population Health and Economic Development on the Example of European Countries

Relationship Between Population Health and Economic Development on the Example of European Countries

DOI: 10.4018/978-1-7998-8189-6.ch018
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The purpose of the chapter is to determine the link between the health of the population and economic development in the case of European countries. Based on the selected health indicators, a composite index was created, while the GDP per capita and disposable income were used as indicators of economic development. The results obtained by TOPSIS method show that there is a significant positive relationship between the composite index of health status of the population and indicators of economic development. Therefore, more investment in health care and improvement of living conditions is essential. The average values of composite population health index indicate that the countries of Western Europe on average have the best health status of the population, followed by the Mediterranean countries and the Northern European countries, while the Baltic countries have the lowest average value of the composite population health index.
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Human capital is an extremely important factor in the economic development of a country. On the other hand, the ultimate goal of socio-economic development is reflected in the improvement of quality of life. This goal includes ensuring social welfare and living standards (Veljković & Živković, 2018). In the analysis of the contribution of human capital to economic development, education is mainly taken into account. However, it is a very narrow interpretation of human capital as a factor of economic development. Both education and health of the population stand out as the main predictors of human capital growth (Anowor et al., 2020). As a rule, healthy people are more productive, which contributes more to the economic performance of the country. In addition, workers who do not have health problems are more physically and mentally energetic and thus have the opportunity to earn higher wages. Therefore, the population health must not be left out as part of human capital (Ray & Linden, 2018). In this regard, it should be noted that health as a component of human capital is often defined as health capital (Akingba et al., 2018). Population health is the result of economic well-being, the quality of health care and the quality of life of people in a particular country.

Problems of quantification of the health status of the population arise because it is a multidimensional problem. That is why research almost always uses a larger number of indicators, among which the following stand out: life expectancy, infant mortality rate, healthy life years, and government health expenditures. The paper aims to create a composite index of the health of the population of European countries, which is a relevant and scientifically based tool for comparing different aspects of the population health status. The basic assumption in the analysis is that countries that achieve better health status of the population realize greater economic development. To test this assumption, a multi-criteria model was created. Also, given that the long-term and slow effects of investing in the health of the population are obvious, the authors decided to assess the relationship between health and certain measures of economic performance for a representative research period.

The model incorporates Eurostat data for 2018 and includes 30 European countries and 8 health-related indicators: People having a long-standing illness or health problem, Self-reported unmet needs for medical examination, Deaths and crude death rate, Infant mortality rate, Population living in households considering that they suffer from noise, Share of people with good or very good perceived health, Healthy life years at birth, and Exposure to air pollution. Eurostat data for 2018 were used because there is still no data for all indicators for 2019. Multi-criteria analysis was applied to create composite indices, where in the first step the standard deviation method was applied to determine the weight coefficients of the criteria, while in the second step the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method was applied as an aggregation method. The last part of the analysis is dedicated to establishing the relationship between the population health, as a determinant of the quality of human capital, on the one hand, and economic development, proxied by GDP per capita and Disposable income, on the other hand.

Key Terms in this Chapter

Health: The unity of physical and mental well-being of people conditioned by genetics and socio-economic performance of the society in which the individual lives.

Multi-Criteria Analysis: A sub-discipline of operations research used in evaluations of multiple conflicting criteria in decision-making.

Criteria Weights: The importance of each of the criteria for a given decision-making problem.

Health-Led Growth Hypothesis: The claim that investments in health can be seen as investments in human capital, which will ultimately contribute to overall economic development.

Composite Index: A single metric of a particular phenomenon created by the aggregation of several disparate indicators.

Disposable Income: Amount of household income available for spending or saving after covering tax and other deductions.

Economic Development: Economic growth that simultaneously enables the realization of structural changes, environmental sustainability, poverty reduction, which leads to social well-being.

TOPSIS Method: A method of multi-criteria analysis based on the concept of an ideal point.

GDP per Capita: Relative measure of economic development of the country that includes in the analysis the number of the country's population.

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