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This study investigates the welfare effects of mor This study investigates the welfare effects of mortality decline and longevity improvement in China over six decades (1952-2012), focusing on the monetary valuation of gains in life expectancy and their role relative to economic growth. Utilizing valuation formulae from the Global Health 2035 report, the authors estimate the value of a statistical life (VSL) and analyze how longevity gains have offset poor economic performance in early periods and contributed to reducing regional welfare disparities more recently.
Key Research Objectives
To quantify the value of mortality decline in China from 1952 to 2012.
To evaluate the welfare impact of longevity improvements relative to GDP per capita growth.
To analyze regional differences in health gains and their implications for welfare inequality.
To provide a methodological framework to calculate the value of mortality decline using age-specific mortality rates and GDP data.
Institutional and Historical Context
Life expectancy at birth in China increased from ~45 years in the early 1950s to over 70 years by 2012, with a particularly rapid rise prior to economic reforms in the late 1970s.
This improvement occurred despite stagnant GDP per capita during the pre-reform period (1950-1980).
Key drivers of longevity gain included:
The establishment of grassroots primary healthcare clinics staffed by “barefoot doctors.”
The Patriot Hygiene Campaign (PHC) in the 1950s, which improved sanitation, vaccination, and eradicated infectious diseases.
A basic health system providing employer-based insurance in urban areas and cooperative medical schemes in rural areas.
Increases in primary and secondary education, which indirectly contributed to mortality reduction.
Methodology
The study uses age-specific mortality rates as a proxy for overall health status, leveraging retrospective mortality data available since the 1950s.
The Value of a Statistical Life (VSL) is monetized using a formula linking VSL to GDP per capita and age-specific life expectancy:
The VSL for a 35-year-old is set at 1.8% of GDP per capita.
The value of a small mortality risk reduction (Standardized Mortality Unit, SMU) varies with age proportional to the years of life lost relative to age 35.
The value of mortality decline between two time points is computed as the integral over age of population density multiplied by age-specific changes in mortality risk and weighted by the value of a SMU.
This approach accounts for population age structure and income levels to estimate monetary benefits of longevity improvements.
Data sources include:
United Nations World Population Prospects for mortality rates and life expectancy.
Official Chinese statistical yearbooks for GDP, health expenditures, and census data.
Provincial data analysis focuses on the period 1981 to 2010, coinciding with China’s market reforms.
Main Findings
Time Series Analysis (1952-2012)
Period GDP per capita Change (RMB, 2012 prices) Life Expectancy Gain (years) Value of Mortality Decline (RMB per capita) Ratio of Mortality Value to GDP Change (excl. health exp.)
1957-1962 -152 -0.29 -126 0.84
1962-1967 3897 12.3 2162 5.72
1972-1977 2813 1.74 344 1.28
1982-1987 18041 1.24 338 0.19
1992-1997 40507 7.39 1360 0.32
2002-2007 102971 1.35 1045 0.11
Longevity gains (value of mortality decline) were especially large during the 1960s, partly compensating for poor or negative GDP growth.
The value of mortality decline relative to GDP per capita growth was much higher before 1978, indicating health improvements contributed significantly to welfare despite stagnant incomes.
Post-1978, rapid economic growth outpaced the value of longevity gains, but the latter remained positive and substantial.
Health expenditure is subtracted from GDP to avoid double counting in welfare calculations.
Regional (Provincial) Analysis (1981-2010)
Province GDP per Capita Change (RMB, 2012 prices) Life Expectancy Gain (years) Value of Mortality Decline (RMB per capita) Ratio of Mortality Value to GDP Change (excl. health exp.)
Xinjiang 22738 17.3 2407 0.58
Yunnan 14449 13.15 1857 0.39
Gansu 14945 9.47 264 0.19
Guizhou 12095 9.19 214 0.20
Hebei 27024 5.72 873 0.11
Guangdong 43086 12.05 358 0.13
Jiangsu 50884 12.04 705 0.14
Inland provinces generally experienced larger longevity gains than coastal provinces, despite coastal regions having significantly higher GDP per capita.
The value of mortality decline relative to income growth was higher in less-developed inland provinces, suggesting health improvements partially mitigate regional welfare inequality.
Contrasting trends:
Coastal provinces: faster economic growth but smaller longevity gains.
Inland provinces: slower income growth but larger health gains.
The diminishing returns to longevity gains at higher life expectancy levels explain part of this pattern.
Economic growth can have negative health externalities (pollution, lifestyle changes), which may counteract potential longevity improvements.
Health Transition and Future Challenges
China’s epidemiological transition is characterized by a shift from infectious diseases to non-communicable diseases (NCDs) such as malignant tumors, cerebrovascular disease, heart disease, and respiratory diseases.
Mortality rates for these major NCDs show a rising trend from 1982 to 2012.
The increasing prevalence of chronic diseases imposes a rising medical cost burden, particularly due to advanced medical technologies and health system limitations.
The Chinese government initiated a major health care reform in 2009 aimed at expanding affordable and equitable coverage.
Although health spending has increased, it remains less than one-third of the U.S. level (as % of GDP), indicating room for further investment and improvement.
Conclusions and Implications
The study finds that sustained longevity improvements have played a crucial role in improving welfare in China, especially before economic reforms.
Health gains have partially compensated for weak economic performance prior to market liberalization.
In the reform era, longevity improvements have contributed to narrowing interregional welfare disparities, benefiting poorer inland provinces more.
The value of mortality decline is a meaningful supplement to GDP per capita as an indicator of welfare.
The authors caution that future longevity gains may face challenges due to rising chronic diseases and escalating medical costs.
The methodology and findings are relevant for other low- and middle-income countries undergoing similar demographic and epidemiological transitions.
Core Concepts and Definitions
Term Definition
Life Expectancy Average number of years a newborn is expected to live under current mortality conditions.
Value of a Statistical Life (VSL) Monetary value individuals place on marginal reductions in mortality risk.
Standardized Mortality Unit (SMU) A change in mortality risk of 1 in 10,000 (10^-4).
Value of a SMU (VSMU) Monetary value of reducing mortality risk by one SMU at a given age.
Full Income GDP per capita adjusted for health improvements, including the value of mortality decline.
Highlights
China’s life expectancy rose dramatically from 45 to over 70 years between 1952 and 2012, despite slow GDP growth before reforms.
The monetary value of mortality decline was often larger than GDP growth prior to 1978, showing health’s central role in welfare.
Inland provinces experienced larger longevity gains than coastal provinces, though coastal areas had higher income growth.
Health improvements have helped reduce interregional welfare inequality in China.
The shift from communicable to non-communicable diseases poses new health and economic challenges.
China’s health system reform in 2009 aims to address rising medical costs and expand coverage.
Limitations and Uncertainties
The study assumes a monotonically declining VSL with age, which simplifies but does not capture the full complexity of age-dependent valuations.
Pre-1978 health expenditure data were back-projected, introducing some uncertainty.
Provincial mortality data are only available for census years, limiting longitudinal granularity.
The analysis does not fully incorporate morbidity or quality-of-life changes beyond mortality.
Future extrapolations are uncertain due to evolving epidemiological and demographic dynamics.
References to Key Literature
Jamison et al. (2013) Global Health 2035 report for VSL valuation framework.
Murphy and Topel (2003, 2006) on economic value of health and longevity.
Nordhaus (2003) on full income including health gains.
Becker et al. (2005) on global inequality incorporating longevity.
Aldy and Viscusi (2007, 2008) on age-specific VSL valuation.
Babiarz et al. (2015) on China’s mortality decline under Mao.
Implications for Policy and Future Research
Policymakers should recognize the economic value of health improvements beyond GDP growth.
Investments in basic healthcare, sanitation, and education were critical for China’s longevity transition and remain relevant for other developing countries.
Addressing the burden of chronic diseases and medical costs requires sustained health system reforms.
Future work should explore full income accounting including quality of life, and analyze health and longevity valuation in other low-income and middle-income countries.
More granular data collection and longitudinal studies would improve understanding of regional and cohort-specific health value dynamics.
This comprehensive study demonstrates how longevity gains represent a critical dimension of welfare, particularly in the context of China’s unique historical, demographic, and economic trajectory. It provides a robust analytical framework integrating epidemiological and economic data to quantify health’s contribution to human welfare.
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