Estimating a health production function for Sub-Saharan Africa (SSA)

Abstract

The paper estimates a health production function for Sub-Saharan Africa based on the Grossman (1972) theoretical model that treats social, economic, and environmental factors as inputs of the production system. In estimating this function, socioeconomic and environmental factors such as income per capita, illiteracy rate, food availability, ratio of health expenditure to GDP, urbanization rate, and carbon dioxide emission per worker are specified as determinants of health status. The parameters of the function are estimated by one-way and two-way fixed and random effects model of panel data analyses. The results of the two-way random effect model suggest that an increase in income per capita, a decrease in illiteracy rate, and an increase in food availability are strongly associated with an improvement in life expectancy at birth. Overall, the results imply that a health policy which may focus on the provision of health services, family planning programs, and emergency aids to the exclusion of other socioeconomic and environmental aspects may do little to improve the current health status of the region.

Notes

See, for example, Beherman and Deolalikar (1988: 698–701).

d(lnX/P) = d(lnX−lnP) = d(lnX)−d(lnP), but growth of aggregate income could be approximated by population growth due to stagnant nature of the economic performance, hence d(lnP) ≈ d(lnY) → d(lnX/P) ≈ d(lnX)-d(lnY) = d(lnX/Y). i.e. the ratio substitutes the per capita expenditure in Equation 6

For a mathematical analysis of the possibility of the negative coefficient see, Appendix A.