Tuesday, July 05, 2011

Economic Freedom Extends Life Expectancy

Following my recent post on life expectancy and economic growth in Chile, here's a more comprehensive analysis in the chart above of the relationship between: a) economic freedom measured by the Heritage Foundation, on a scale from 1 (repressed) to 100 (free), and b) life expectancy for 176 countries in 2009. 

 The regression line in the chart above shows a clear and positive relationship between economic freedom and life expectancy, with higher levels of economic freedom being associated with longer life expectancies.  Specifically, from the regression equation we can say that every 10 point increase in the economic freedom index is associated with a 4.6 year increase in life expectancy.   

Bottom Line: As Larry Kudlow reminds us all the time, "Free market capitalism is the best path to prosperity," and I'll add "the best path to a longer life." There's nothing more precious than human life, and the evidence shows that economic freedom will sustain, nurture, conserve and extend human life, while economic repression does the opposite: it stifles and squashes the human spirit and shortens life expectancy.  

HT: Charles Musick for the data and idea. 

27 Comments:

At 7/05/2011 2:54 PM, Blogger Junkyard_hawg1985 said...

Heritage breaks down economies into five groups. The average life expectancy for these five groups are:

Free - 81.3 years
Mostly Free - 78.2 years
Moderately Free - 72.3 years
Mostly Unfree - 64.0 years
Repressed - 61.0 years

 
At 7/05/2011 3:20 PM, Blogger Benjamin said...

Japan has the highest life expectancy of any major nation, and spends about 4 percent of their GDP on health care.

I say we copy Japan, whatever they are doing.

 
At 7/05/2011 3:24 PM, Blogger Buddy R Pacifico said...

The Heritage 2011 Index of Economic Freedom has the U.S. dropping and currently ranked 7th. Life expectancy in the U.S. is not growing but is starting to decline.

Hmmm.

 
At 7/05/2011 3:24 PM, Blogger Junkyard_hawg1985 said...

"I say we copy Japan, whatever they are doing."

And that comes after the last nine months of saying we don't need to do what Japan is doing.

 
At 7/05/2011 3:35 PM, Blogger Shane Leavy said...

Part of Japan's secret is probably cultural. I found it incredibly easy to eat well in Japan: even snacks seemed to be lower in salt and sugar than the equivalents here. I used to eat out several days a week, delicious and nutritious food at low cost. I miss it!

Anyway I notice that at the top end of that graph a number of countries have mediocre economic freedom. Countries like France do quite well. Although I guess countries with massive inward migration (like the US) might have misleadingly low life expectancies as poor people with worse health pour over the border.

 
At 7/05/2011 3:49 PM, Blogger Ron H. said...

"And that comes after the last nine months of saying we don't need to do what Japan is doing."

Hmm - good point - and it's been a lot longer than 9 months.

 
At 7/05/2011 4:10 PM, Blogger Benjamin said...

Okay, smarty-pants.

Let's copy what works in japan, however they handle health care, regardless of ideology, it seems to work.

Their monetary policy is a noose around their economic necks.

 
At 7/05/2011 5:42 PM, Blogger Rufus II said...

You Might get tired of fish, and rice, Benny. Jes Sayin.

We Do get kind of a raw deal on the "life expectancy" thing. Our definition of "live birth," our high mortality rate from homicides/accidents, etc.

When it comes to things like "survival of serious illness (such as cancer,)" I think we come out right at the top.

Also, our government allows us to be "ripped off" on drug costs. The governments of Canada, France, U.K., et al negotiate their drug costs. Medicare isn't allowed to do that.

 
At 7/05/2011 6:04 PM, Blogger Benjamin said...

Rufus-

We have a health plan designed by the providers and insurers. They have the lobbyists.

The taxpayers? Get out your wallet.

A free market solution would probably be better--as long as you are cool with euthanasia.

 
At 7/05/2011 6:26 PM, Blogger Benjamin said...

OT-

Gold has topped out.

OT, but I want credit.

I say gold prices have topped out. Why?

This little blurb:

"Gold Max, a chain of cash-for-gold stores, plans to open 100 stores ranging in size from 700 to 4,000 SF in SoCal within the next year. Tustin-based Present Value Properties is the company’s exclusive broker for California."

That's it. That's the top. When some rinky-dink Orange County group opens up a bunch of gold-buying shops, you know the top has been breached.

Remember I called it.

Gold at $1,500 is the top.

It's official.

 
At 7/05/2011 8:53 PM, Blogger Larry G said...

how about identifying the countries on the regression chart?

would those at the top just happen to be the same countries that many here call "socialist"?

tsk tsk....

so "economic freedom" and "socialism" are "good"?

 
At 7/05/2011 10:17 PM, Blogger Buddy R Pacifico said...

Larry g writes:

"so "economic freedom and "socialism" are good?"

Larry go to all the rankings and give us all the answer.

 
At 7/05/2011 10:34 PM, Blogger Ron H. said...

"Also, our government allows us to be "ripped off" on drug costs. The governments of Canada, France, U.K., et al negotiate their drug costs. Medicare isn't allowed to do that."

Rufus, do you understand the reason for the price difference? Do you think it's just that Canada et al, are tougher negotiators?

To get started on the right path, ask yourself how many new drugs are developed and brought to market outside the US.

Then, when you have that answer - almost none - ask yourself whether you think that price controls in other countries may be one reason for the lack of pharmaceutical R&D in those countries.

We're almost there: Now, consider that, at least, threatens to not honor drug company patents unless the price controls are observed. (another word for this is blackmail)

Does it make more sense now?

Many important drugs cost more than $1 bn to bring to market. There won't be any new ones if that cost can't be recovered.

 
At 7/06/2011 2:16 AM, Blogger Ron H. said...

correction:

We're almost there: Now, consider that Canada at least, threatens to not honor drug company patents unless the price controls are observed. (another word for this is blackmail)

 
At 7/06/2011 8:20 AM, Blogger Junkyard_hawg1985 said...

This comment has been removed by the author.

 
At 7/06/2011 8:21 AM, Blogger Junkyard_hawg1985 said...

This comment has been removed by the author.

 
At 7/06/2011 8:22 AM, Blogger Junkyard_hawg1985 said...

Henry Hazlitt wrote in “Economics in One Lesson” that liberals often make the mistake of only looking at a small piece of a problem without regard to the rest of the impact of a policy. That has certainly shown up in this discussion. When looking at life expectancy data, the knee-jerk reaction of some posters was to change healthcare policy. The problem is that healthcare policy is only one of the factors that affect life expectancy. Other factors include wealth, the availability of food, disease, the availability of medicines, the quality of food available, exercise, genetics, etc.

I have two graphs that that show the folly of only considering healthcare policy. The first plot is the percentage of healthcare spending paid by the government vs. life expectancy. The second plot is per capita GDP vs. life expectancy.

Per capita GDP shows a strong correlation, while government spending shows a very weak correlation.

 
At 7/06/2011 8:29 AM, Blogger Jet Beagle said...

Benjamin: "I say we copy Japan, whatever they are doing."

The difference in life expectancy between Japan and the U.S. has little to do with differences in health care systems.

If you truly want to understand differences in lief expectancy, please read this esaay by the National Center for Public Policy Research. Here's a couple of points:

"Comparisons of distinct ethnic populations in the U.S. with their country of origin find similar rates of life expectancy. For example, Japanese-Americans have an average life expectancy similar to that of Japanese."

"A good deal of the lower life expectancy rate in the U.S. is accounted for by the difference in life expectancy of African-Americans versus other populations in the United States. Life expectancy for African-Americans is about 72.3 years, while for whites it is about 77.7 years"

"A plethora of factors influence life expectancy, including genetics, lifestyle, diet, income and educational levels. A health care system has, at best, minimal impact."

 
At 7/06/2011 11:20 AM, Blogger Benjamin said...

Jet Beagle-

Then we should go to any system that uses only 4 percent of GDP.

 
At 7/06/2011 11:39 AM, Blogger Jet Beagle said...

Benjamin: "Then we should go to any system that uses only 4 percent of GDP."

Why?

If increasing life expectancy was our only goal, then I might agree. But most of our health care spending has nothing to do with increasing life expectancy. Need some examples? Consider these:

orthodontia
breast augmentations
hip replacement surgery
psychoanalysis
LASIK surgery
most laminectomies/spinal fusions

These and thousands of other medical treatments improve the quality of our lives but have little impact on our life expectancies.

IMO, the U.S. spends a larger portion of our GDP on medical care because we are so much wealthier than other nations. We can spend money to improve quality of life because we have the wealth to spend.

 
At 7/06/2011 1:41 PM, Blogger Shane Leavy said...

Junkyard_hawg1985, if you change that Gapminder GDP per capita/life expectancy graph to lin instead of log, the correlation breaks down a bit. We see Luxembourg with a massive GDP per capita of $50,135 and a life expectancy of 79. Costa Rica has a low GDP per capita of only $4,323, yet their life expectancy is only one year less than Luxembourg: 78.

At very low incomes, life expectancy can be anywhere from 41 (Zimbabwe, GDP per capita $475) to 74 (Vietnam, GDP per capita $503).

 
At 7/06/2011 2:49 PM, Blogger Ron H. said...

Breast augmentations?

Well, I know breast augmentation improves MY quality of life, but it's less clear how it improves the quality of life of the augmentee. :)

 
At 7/06/2011 3:05 PM, Blogger Ron H. said...

"At very low incomes, life expectancy can be anywhere from 41 (Zimbabwe, GDP per capita $475) to 74 (Vietnam, GDP per capita $503)."

And, Vietnam has a lower government share of total health spending.

From only these two data points I might surmise the following:

- Government share of healthcare spending isn't related to life expectancy.

- There must be important factors other than healthcare spending that affect life expectancy - especially in Zimbabwe.

- GDP/capita isn't a very good measure of anything at these very low levels.

 
At 7/06/2011 4:22 PM, Blogger Junkyard_hawg1985 said...

Shane,

The data should be measured in log of per capita GDP because going from an income of $2000/year to $10,000/year will have a much bigger impact on health than going from an income of $60,000/yr to $68,000/yr. At the lower end, this change in income means the difference between factors such as clean water and refrigeration which have a much bigger impact on life expectancy.

 
At 7/06/2011 4:33 PM, Blogger Shane Leavy said...

That seems to make sense indeed. Actually I do also think increased GDP per capita improves health (richer people tend to live longer WITHIN countries too).

But there are other ways to think about the data. Disease like malaria can inhibit economic growth by deterring foreign trade and tourism. So MAYBE top-down interventions to improve health could have positive knock on effects on economic growth. China, for example, experiences economic stagnation but rapid improvements in life expectancy prior to economic liberalisation:
www.bit.ly/nqa3OI

 
At 7/07/2011 8:58 AM, Blogger VangelV said...

I say we copy Japan, whatever they are doing.

Do you mean that we don't count premature babies under 1 pound as live births and lie about centenarians? Or that we eat better and a lot less?

 
At 7/11/2011 10:31 AM, Blogger troopa said...

@benjamin
"Their monetary policy is a noose around their economic necks."

...so is FED's

 

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