Improving Health and Education: Why Increasing
Income Is Not Sufficient
Health and education levels are much higher in high-income countries. There
are good reasons to believe that the causality runs in both directions: With
higher income, people and governments can afford to spend more on education
and health, and with greater health and education, higher productivity
and incomes are possible. Because of these relationships, development policy
needs to focus on income, health, and education simultaneously. This conclusion
is parallel to our conclusion in Chapter 5 that we need a multipronged
strategy to address the stubborn problems of absolute poverty.
People will spend more on human capital when income is higher. But the
evidence shows clearly that even if we were able to raise incomes without a
large improvement in health and education, we could not count on that income
increase being used to adequately invest in children’s education and health.
The market will not solve this problem automatically, and in many cases,
household consumption choices themselves may lead to a surprisingly small