Disease and Development Revisited: A Reevaluation of the Eect of Life Expectancy on Economic Growth

In an important recent paper Acemoglu and Johnson (2007) con- clude that increased life expectancy causes decreases in income per capita rather than increases, both in the short and the long run. This is at odds with conventional wisdom, microestimates of the eect of life expectancy on income per capita and with the results of recent simulations of a neoclassical growth model by Ashraf et al. (2008). We present a possible solution to this puzzle. We …rst rederive the theoretical relationship between life expectancy and income per capita implied by the model of Acemoglu and Johnson. We then redo their empirical analysis of the eect of changes in life expectancy on income per capita. We obtain results that indicate that the impact of changes in life expectancy on income per capita are very much in line with what standard neoclassical growth theory predicts. In particular, we obtain estimates of the short run eect that are very similar to Acemoglu and Johnson but we also obtain results of the dynamic eects that are very dierent from the conclusions in Acemoglu and Johnson. Instead, our estimates of the dynamic eects are very much in line with the simulation results of Ashraf et al.