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Friday, December 23, 2011

U.S. Health Not #1: Deconstructing Legatum Part 1

As I reported on December 9, the Legatum Prosperity Index claims that the U.S. ranks #1 in the world in health. Like Aaron Carroll, I find this to be a dubious proposition. In the meantime, Nathan Gamester of the Legatum Institute was kind enough to help me learn my way around the website and find the data I wanted. He is not responsible for my conclusions, which still view the idea that the U.S. has the best health in the world as unsupported by the evidence.

To review, Legatum ranks the U.S. #1 largely based on the fact that it has by far the highest level of health care spending per capita in the world. In a defense of this outcome, the report states (p. 46):

Furthermore, the health expenditure variable is only one of the 17 variables in our Health sub-index and one of modest importance in comparison to the others....To further explore the importance of the healthcare expenditure on the overall performance of the United States, we conducted a simple exercise in which we substituted US expenditure with that of Norway. The result is that United States would rank 7th, still among the top 10 best performing countries in the Health sub index.
 This is more confusing than illuminating. While some variables are more highly weighted than health spending, for example, individuals' satisfaction with their health, the difference in scores are tiny; by contrast, the differences in health care spending are gigantic. As the report states, the U.S. spends "66% more than the next country (Norway), 84% more than Canada, 133% more than the UK, and 205% more than New Zealand." Let's take a look at the actual values for the 17 variables, which I will divide up between objective measures of health care outcomes, subjective measures of satisfaction with aspects of health, and health care inputs. I will compare the U.S. (health sub-index score of 3.54) with France (7th ranked with a health sub-index score of 2.77, but once ranked best in the world by the World Health Organization.


France U.S. Measure

Infant mortality

3.2 6.8 Per 1000 live births
Life expectancy

81.07 78.66 Years

73 70 Years
Death from respiratory disease

26 66 Per 100,000 population
Tuberculosis incidence

6.1 4.1 Per 100,000 population

5 5 Percent
DPT immunization rate

99 95 Percent
Measles immunization rate

90 92 Percent

Water quality satisfaction

85.72 89.65 Percent
Health satisfaction

86.49 85.81 Percent
Level of worrying

30.04 33 Percent
Well rested

67.07 71.72 Percent
Health problems

22.86 21.26 Percent
Environmental beauty satisfaction

90.57 89.91 Percent

Health expend per capita

3778 7536 PPP USD
Hospital beds

7.11 3.1 Per 1000 population
Sanitation 100% 100%

100 100 Percent

Health sub-index score

2.77 3.54

* Health-adjusted life expectancy

France has substantial edges on all but one of the objective measures (infant mortality is less than half the U.S. rate), is essentially tied on the satisfaction measures, provides more than twice as many hospital beds per thousand population, and only trails - by a huge margin, of course - in spending on health care. Spending almost exactly half what the U.S. spends, the French get an extra 3 years of healthy life, fewer than half the deaths from respiratory diseases, and less than half the infant mortality. As Carroll asked, how is spending a measure of health? This is a more methodological question I'll take up in a future post.

Why am I taking the time to show the weakness in this analysis? The short answer is that Legatum will not be going away anytime in the near future. It is funded by a Dubai-based investment firm that has founded, in addition to the Legatum Institute in London, the Legatum Center for Development and Entrepreneurship at MIT. We will be seeing a lot more of this report in the future.

1 comment:

  1. If anything, more health spending by individuals, especially on cures rather than preventative measures, is a sign of sickness/lack of health. And does this even measure inflation? Because health prices in the US are staggering.

    If they want to consider health/medical expenditure, they should divide healthcare spending into three separate things: medical research, preventative healthcare spending and cure healthcare spending. The former two are positive, while the latter is a big negative (and should have a heavy weighting too). If people spend a lot on trying to cure themselves, as they do in the US, then clearly there is a big problem. It's a shame that such a good idea of an index is ruined by an unintelligent oversight such as this one.