Thesis (Final) - Andrew PDF

TBE 0NIvERSITY 0F Q0EENSLANB
FAC0LTY 0F B0SINESS, EC0N0NICS ANB LAW

SCB00L 0F EC0N0NICS

A SENSITIVITY ANALYSIS OF
POPULATION HEALTH DETERMINANTS

A Thesis (ECON7930) submitted to the School of Economics, The University of
Queensland, in partial fulfilment of the requirements for the degree of Master of
International Economics and Finance (Advanced).

by

TAN ENu }00

Bachelor of Banking (Hons), Universiti Utara Malaysia
8 November 2010

Supervisors: Dr. Kam Ki TANG & Dr. Fabrizio CARMIGNANI
i

ACKN0WLEBuENENT

I would to take this opportunity to extend my deepest thanks and appreciation to
those who have assisted and contributed, in one way or another, to the completion
of this thesis.

I am especially grateful to both of my supervisors, Dr. Kam Ki Tang and Dr. Fabrizio
Carmignani, for their undivided attention and interest in the development of this
thesis. Their continuous feedbacks and useful suggestions have been instrumental in
shaping the overall direction of my research.

I would also like to express my utmost gratitude to the Australian Endeavour Awards
program for providing me with a scholarship and making my dreams of pursuing a
postgraduate study in The University of Queensland (UQ) a reality. Without it, all of
these would have been impossible.

My family and friends have been a constant source of strength and support and I wish
to say a big thank you to them. Thank you as well to my good friend Azhar for the
brainstorming sessions that we had. It was really engaging.

Lastly, I wish to dedicate this thesis to the greatest and dearest person I missed most.
Pa, though you are no longer here, I hope you will be proud of me. This is for you, Pa.

ii

BECLARATI0N

I declare that the work presented in this project is, to the best of my knowledge and
belief, original and my own work, except as acknowledged in the text, and that
material has not been submitted, either in whole or part, for a degree at this or any
other university.

Signed,

Tan Eng Joo
8 November 2010

iii

ABSTRACT

The average population health in the last two centuries has improved due to various
economic developments, societal transformations and technological progress. An
array of socioeconomic, demographic and political variables is tested against health
measures such as life expectancy, infant mortality and under-5 mortality in the quest
to uncover population health determinants. Consequently, the list of variables
claimed to affect health is increasingly growing in the literature and therefore creates
a need for a sensitivity analysis. The purpose of this study is to identify and isolate
population health determinants which are robust to changes in the choice of
explanatory variables by employing a modified version of the extreme-bounds
analysis (EBA) developed by Leamer (1983, 1985) and used in Levine and Renelt
(1992). A cross-sectional sample set of 95 developed and developing countries is used
to facilitate this investigation. Income per capita, female education and access to safe
water are among the only few variables found to be robust under the procedure. The
EBA results seem to suggest that population health is satisfactorily explained by a
small set of key variables. In particular, the robustness of a regional dummy variable
indicates that sub-Saharan African countries are extremely disadvantaged in health
when compared to other regions or countries. In addition, there is a scope for further
research especially towards establishing evidence of causality for these robust
variables in the context of determining population health.

Keywords: Population health; Health determinants; Sensitivity analysis; Mortality

iv

TABLE OF CONTENTS

Acknowledgement .............................................................................................................................. i
Declaration ........................................................................................................................................... ii
Abstract ................................................................................................................................................ iii
List of Figures ..................................................................................................................................... vi
List of Tables ....................................................................................................................................... vi
Acronyms and Abbreviations ...................................................................................................... viii
Chapter 1: Introduction ................................................................................................................... 1
1.1 Why is Population Health Important? .............................................................................. 2
1.2 Research Objectives ......................................................................................................... 3
1.3 Organization of Chapters .................................................................................................. 5
Chapter 2: Population Health Theories ...................................................................................... 6
2.1 Health in the Nineteenth Century .................................................................................... 6
2.2 Health in the Early Twentieth Century ........................................................................... 10
2.3 Contemporary Health ..................................................................................................... 15
2.4 Summary ......................................................................................................................... 17
Chapter 3: Review of Health Regression Studies ................................................................... 18
3.1 Economic Development ................................................................................................. 18
3.2 Human Capital ................................................................................................................ 23
3.3 Health Resources ............................................................................................................ 25
3.4 Governance .................................................................................................................... 26
3.5 Summary ......................................................................................................................... 28
Chapter 4: Preliminary Estimations and Diagnostics .................................................. 29
4.1 The Basic Health Regression Model ............................................................................... 29
4.2 Explanation of Dependent and Independent Variables ................................................. 31
4.3 Data Averaging ............................................................................................................... 32
4.4 Expected Relationships between Variables ................................................................... 36
4.5 Some Preliminary Estimations and Diagnostic Results .................................................. 43
v

4.5.1 Possible Collinearity between Gini Index and other Explanatory Variables ........... 46
4.5.2 Excluding the African Dummy Variable (AFR) .......................................................... 47
4.5.3 Functional Form Stability and Omitted Variables Test ............................................ 49
4.6 Summary ......................................................................................................................... 50
Chapter 5: A Sensitivity Analysis ................................................................................................. 51
5.1 Background of the Extreme Bounds Analysis ................................................................. 51
5.2 Applications of the Extreme Bounds Analysis ................................................................ 53
5.3 Extreme Bounds Analysis for Population Health ............................................................ 56
5.3.1 EBA Results for Life Expectancy ............................................................................... 57
5.3.2 EBA Results for Infant Mortality .............................................................................. 61
5.3.3 EBA Results for Under-5 Mortality .......................................................................... 64
5.4 A Reasonable Extreme Bounds Analysis ......................................................................... 67
5.5 A Further Sensitivity Test................................................................................................ 69
5.6 Summary ......................................................................................................................... 70
Chapter 6: Conclusion ..................................................................................................................... 72
References .......................................................................................................................................... 75
Appendix ............................................................................................................................................. 81

vi

List of Figures

Figure 1.1: World Population Health over the Decades ............................................................ 1
Figure 2.2: The Millennium Preston Curve ............................................................................. 12
Figure 3.1: GDP per Capita (2000 $), 1990-2008 ..................................................................... 19
Figure 3.2: Under-5 Mortality (per 1,000), 1990-2008 ............................................................ 19
Figure 4.1: The GDP Intervals and Calculations for Japan ....................................................... 34
Figure 4.2: GOV Calculation for Malaysia ................................................................................ 34
Figure 4.3: Scatter Plots of Life Expectancy and Independent Variables ................................ 38
Figure 4.4: Scatter Plots of Infant Mortality and Independent Variables ................................ 39
Figure 4.5: Scatter Plots of Under-5 Mortality and Independent Variables ............................ 41
Figure 5.1: A Schematic Representation of the EBA Criterion for Robustness ........................ 58

List of Tables

Table 4.1: Summary Statistics of All Variables ......................................................................... 35
Table 4.2: Relationships between Population Health Indicators
and Independent Variables ...................................................................................... 42
Table 4.3: Regression Result of Equation (1) ........................................................................... 44
Table 4.4: Standardized Beta Coefficients ............................................................................... 45
Table 4.5: Correlation Matrix ................................................................................................... 46
Table 4.6: Auxiliary Regression (Dependent Variable: Gini Index) .......................................... 47
Table 4.7: Regression Result of Equation (1) excluding the African Dummy
Variable (AFR) .......................................................................................................... 48
Table 5.1: EBA Results for the Free (I) Variables
(Dependent Variable: Life Expectancy, LFE
1
) ........................................................... 59
Table 5.2: EBA Results for the Z-variables
1
) ........................................................... 60
vii

(Dependent Variable: Infant Mortality, IFM
1
) ......................................................... 62
(Dependent Variable Infant Mortality, IFM
1
) .......................................................... 63
(Dependent Variable: Under-5 Mortality, UFM
1
) .................................................... 65
(Dependent Variable Under-5 Mortality, UFM
1
) ..................................................... 66
Table 5.7: Summary of the Original EBA and REBA Results ..................................................... 68
Table 5.8: Summary of EBA Results for the Lag Variables of Interest ..................................... 70
Table A1: Standardized Beta Coefficients (without AFR) ......................................................... 83
Table B1: REBA Results (Dependent Variable: Life Expectancy, LFE
1
) ..................................... 84
Table B2: REBA Results (Dependent Variable: Infant Mortality, IFM
1
).................................... 86
Table B3: REBA Results (Dependent Variable: Under-5 Mortality, UFM
1
) .............................. 88
Table C1: EBA Results for the Lag Variables of Interest
1
) ............................................................ 90
(Dependent Variable: Infant Mortality, IFM
1
) .......................................................... 92
(Dependent Variable Under-5 Mortality, UFM
1
) ...................................................... 94

viii

Acronyms and Abbreviations

AFR African dummy variable
EBA Extreme bounds analysis
EDU Female education
EXP Health expenditure per capita
GDP Gross domestic per capita
GIN Gini index / coefficient
GOV Governance quality
IFM Infant mortality
LFE Life expectancy
PPP Purchasing power parity
PHY Number of physicians
REBA Reasonable extreme bounds analysis
RESET Regression Specifications Error Test
UFM Under-5 mortality
UNU-WIDER World Institute for Development Economics Research of the United Nations
University
URB Urbanization
WAT Access to safe water
WDI World Development Indicators
WIID World Income Inequality Database

1

52
56
60
64
68
72
76
40
60
80
100
120
140
160
1
9
6
0
2
0
0
9
Life expectancy Infant mortality Under-5 mortality
Y
e
a
r
s
P
e
r

1
,
0
0
0
Chapter 1: Introduction
World population health has improved over the decades as seen in several health indicators
such as life expectancy, infant mortality and under-5 mortality. People on average are
expected to live longer while the number of infants and children dying every year has also
reduced substantially. Figure 1.1 presents the trend of world population health over the past
half-century. Life expectancy (years) is measured on the left axis while both infant mortality
and under-5 mortality (per 1,000) are measured on the right axis.

Figure 1.1: World Population Health over the Decades
Source: World Development Indicators (WDI) database.

After reading the above, the reader may be tempted to ask the following. Why is population
health important? What are the factors that contribute to the significant improvement
experienced in population health? The following sections discuss some possible answers.

2

1.1 Why is Population Health Important?
To answer the first question, it is first necessary for one to consider health from two
perspectives where (i) it is viewed as an objective itself and (ii) it is regarded as a means to
an end. In the first perspective, good health is often associated with longer lifespan and the
ability to partake in the pleasures of the living. Many would consider the attainment of good
health and longevity as ones right in life and would prefer to delay death as long as possible.
Nobel Laureate Kenneth Arrow (1963) once remarked The desire for the prolongation of
lifewe may take to be one of the most universal of all human motives. In view of this,
notable organizations such as the United Nations, World Bank and World Health
Organization have established worldwide efforts to safeguard and improve the health of
people around the globe. Population health is therefore important because it measures how
much progress has been made in the pursuit of longevity and the reduction in fatalities
across and within countries.

The second perspective, however, regards health as an input in the achievement of a
broader objective. For example, in recent years, population health has been linked to other
areas of development especially in economic growth and human capital. Another Nobel
Laureate, Amartya Sen, has contributed greatly in this field by redefining development in the
context of human capabilities approach. He suggests that the measurement of growth
should not only be about income levels and commodities but it should also incorporate the
well-being of individuals. According to him, the concept of well being is very closely related
to what people can do or can be or their capability to do things which they value.

In many aspects, the notion of well-being is often linked to an individuals income and
command over goods and services. Nevertheless, Sen (1984) debates fervently over this
restrictive idea and deems it to be inappropriate for measuring economic development. He
offers an alternative explanation by equating well-being to being well which in its simplest
interpretation means accomplishing things such as living longer, being well-nourished,
having better health and obtaining education. Perhaps Sen et al. (1987) capture the essence
3

of the above argument best by stating that the value of the living standard lies in the living,
and not in the possessing of commodities, which has derivative and varying relevance.

To this end, health status has been elevated to a position as important as income per capita
in explaining general well-being. Indicators of population health are more sensitive to the
well-being of the vulnerable segments of the society as compared to income-related
indicators (Subramanian et al., 2002). Sen (1995) proposes that mortality indicators should
also be used to measure economic success because of their rich informational value. He
outlines three main reasons for this suggestion. First, mortality information has intrinsic
importance as people tend to value long life ceteris paribus. Second, the state of mortality
forms a pre-condition for development since being alive is necessary for various economic
activities to take place. Third, mortality rates have associative relevance to other valuable
achievements such as quality of life and social equality. Consequently, population health is
not only important as an objective itself, it is also important because of the links it shares
with economic growth and other aspects of development. This argument then leads to the
next question. What determines population health?

1.2 Research Objectives
The second question is more difficult to answer than the first one. The health literature is
abundant with studies investigating the factors that affect population health but they also
produce many different and contrasting results. Various studies conducted across and within
countries to find determinants of health do not always share the same conclusion. If this is
indeed the case, then how should one put confidence in these results? Which factors or
variables are more likely to affect population health? This is the problem which the thesis
wishes to address and answer.

Specifically, it seeks to assess the validity of several population health determinants claimed
in other studies by using an empirical technique called the extreme bounds analysis (EBA).
The motivation for engaging in an exercise like this is largely due to the scarcity of a rigorous
4

cross-country sensitivity analysis of population health determinants in the literature. The
thesis aims to fill this gap by providing some evidence of such analysis across the widest
possible range of countries using the latest series of data available. The EBA works by
allowing the user to evaluate the robustness of a variable of interest and its associative
relationship with the dependent variable. Robustness in this context refers to the strength of
the relationship between the variable of interest and the dependent variable in different
model specifications. The more robust a variable, the more confidence one can have in the
relationship ceteris paribus. The EBA test for population health determinants is therefore an
effort to provide an indicator to gauge the credibility of factors that affect population health.

Before proceeding further, however, it is imperative that the reader should be informed that
the thesis is not attempting to address issues of causality or to provide evidence of causal
effects for variables that are found to be significantly related to population health.
Numerous health studies have explored such issues considerably and they are perhaps
worth more investigating in another different setting or scenario. For this reason, the thesis
is not establishing causal links nor providing any evidence of causality for the population
health determinants discussed in the text. It simply wishes to examine whether the partial
correlations between population health and its claimed determinants found in the literature
are robust if the explanatory variables on the right-hand side changes. However, there may
be instances where the reader is inadvertently led to infer a causative effect of the
explanatory variables used for the purpose of the EBA test. Therefore, to avoid confusion,
the thesis will be explicit about the main objective of this research whenever possible and
appropriate in the text.

In the rest of the discussion that follows, health indicators such as life expectancy, infant
mortality and under-5 mortality will be used interchangeably to represent population health.
These indicators are chosen based on their popular usage in the literature and also for the
broad availability of their data.

5

The following are the research objectives of this thesis:
(1) To investigate whether well-accepted cross-country population health determinants
such as income, income inequality, female education and access to safe water are
statistically significant in a proposed basic health regression model.
(2) To apply the extreme bounds analysis (EBA) on the basic health regression model and
identify variables which are robust towards changes in the choice of information set
(explanatory variables).
(3) To determine potential determinants which are strongly associated with population
health from the EBA results.

1.3 Organization of Chapters
The rest of the thesis is organized as follows. Chapter 2 will discuss the various population
health theories found in the health literature. Chapter 3 is a review of the population health
determinants in existing health regression studies. Chapter 4 proceeds with the preliminary
estimations and diagnostic tests of a proposed basic health regression model. Chapter 5
continues with the application of the extreme bounds analysis (EBA) on the basic health
regression model and the interpretation of results. Chapter 6 will conclude and provide
some suggestions for future research.

6

Chapter 2: Population Health Theories
Population health before the Industrial Revolution (circa 1800) is relatively poor when
compared to todays standard. During that era, the lack of modern-day amenities, medical
interventions and public health awareness coincided with low life expectancy and high
mortality rates in countries such as England and Wales. However, over the last two centuries,
considerable developments have occurred in many areas related to health and these enable
people on average to live longer and enjoy a better quality of life.

This chapter is organized to present these developments throughout three time periods in
which population health has shown substantial progress through distinct yet interrelated
channels of operation. Three themes emerged during these periods and they are nutrition,
income and inequality. Health studies surveying the nineteenth century, the early twentieth
century and the contemporary age are discussed as follows.

2.1 Health in the Nineteenth Century
The rise in the standard of living played a rather important role in reducing overall mortality
during the nineteenth century (McKeown and Record, 1962; Preston, 1977). Lower death
rates from infectious diseases such as tuberculosis, typhoid and cholera were linked to
socioeconomic progress in the form of better diet and sanitary reforms. In addition, the
major changes brought about by the Industrial Revolution led to a period of sustained food
supply production and population growth. As a result, average mortality across the world
decline. As pointed by influential scholar Thomas Malthuss in his theory of population
growth, it is evident that material resources were needed to maintain human survival
1
.

At the same time, the diffusion of new discoveries in medical technology
2
which helped to
improve preventive and curative measures against fatal diseases was largely downplayed as

1
Malthus perceived that population growth is dependent on the economys output.
2
One example is the germ theory of disease. It facilitated the discovery of drugs, vaccines and antiseptic which
encouraged consumption of cleaner water and food as well as improvements in personal hygiene and infant
nourishment. The interactions between these variables arguably help to reduce mortality.
7

a significant contributor to the reduction in mortality rates. In relation to this, Thomas
McKeown also wrote several persuasive papers which dismiss the role of prophylaxis and
public health services as the main causes for the historical decline in mortality rates
(McKeown and Brown, 1955; McKeown et al., 1972).

McKeowns view received support from several economists, demographers and
epidemiologists who agreed that there were significant and unexplained time gaps between
the advances occurring in health technologies and the gains seen in life expectancy. For
example, the English death rates from tuberculosis, one of the most lethal diseases in
England and America during that time, dropped dramatically by the year 1900 in spite of the
fact that an effective chemotherapy treatment was not widely available until the year 1947
(Fogel, 1986). A similar pattern of inconsistency was also observed in other diseases such as
typhoid, pneumonia and measles. With this reasoning, some therefore remain skeptical
about the role of public health services in reducing mortality during the nineteenth century
3
.

In lieu of the medical technology and health infrastructure proposition, Fogel (1986)
considers the nutritional status hypothesis to be more appealing in explaining why there
were fewer cases of infant deaths in Europe and America between 1850 and 1900. The
hypothesis claims that the balance between nutrient intake and its usage thereafter by the
human body is strongly linked to mortality. Subsequently, measures of birthweight and
height which act as proxies for nutrition are found to have an impact on the long-term
decline of mortality for infants and non-infants respectively
4
.

The economic value of nutrition gained more recognition after Leibenstein (1957) proposed
a relationship between the calorie intake of workers with their level of productivity in an
economic growth framework. Many would not deny that nutrition plays a very influential

3
There are however exceptions to this. For example, Szreter (2002) provides a critical re-examination of
McKeowns hypothesis and believes public health and medical knowledge have contributed significantly to
mortality reductions during the nineteenth century.
4
For an elaborate discussion on this, see Fogel et al. (1997).
8

role in determining the health of an individual but doubts persist at the aggregate level.
Indeed, nutrition as an important variable connecting both health and productivity has also
been heavily debated in later studies (Wolfe and Behrman, 1982; Steckel, 1995; Strauss and
Thomas, 1998).

In order to place the discussion into perspective, Figure 2.1 can be used to interpret the
possible relationships existing between nutrition, health and socioeconomic variables. As
represented in the figure, nutritional status is directly related to proximate determinants
such as diet, disease and physical workload experienced over the years. These three
components function to create a balance between nutrition intake and the claims against it.
The proximate determinants in turn are dependent upon the combination of several
socioeconomic variables. Income and food supply work to provide a healthy diet while
personal hygiene, public health services, health technology and the disease environment
determine the virulence of diseases.

It is also reasonable to suggest that during the nineteenth century, the amount of physical
workload undergone would reflect ones social standing within a community. For instance,
an individual with a higher status and income (e.g. lawyer) was less likely to be subjected to
heavy physical duties or hard labor as opposed to a lower equivalent (e.g. farmer). Therefore,
for a certain amount of confidence, one can argue that income will determine the amount of
physical workload experienced as indicated in the figure. By taking the socioeconomic
variables and proximate determinants into account, nutritional status would then produce
functional outcomes such as mortality, morbidity, productivity and human capital formation.
Eventually, all of these outcomes will influence socioeconomic conditions in the long-run and
creates a virtuous or vicious cycle. Figure 2.1 is by no means a complete representation of
the possible pathways determining population health because there are other factors such
as sheltering and medicine that can affect health as well. However, in the context of this
discussion, the focus is largely given to nutrition as it was arguably an important factor in the
reduction of mortality rates during the nineteenth century.
9

Source: Adapted from Steckel (1995)
PROXIMATE
DETERMINANTS
Diet
Disease
Physical workload
NUTRITIONAL
STATUS
FUNCTIONAL
OUTCOMES
Mortality
Morbidity
Productivity
Human capital
formation
SOCIOECONOMIC
DETERMINANTS
Income
Public health
Personal hygiene
Disease environment
Health technology
Food supply
Figure 2.1: Possible Relationships between Nutrition, Health and Socioeconomic Variables
10

Additionally, the nutritional/efficiency wage model as surveyed in Bliss and Stern (1978a, b)
views nutrition as a health measure itself and offers a general equilibrium explanation of
poor health and unemployment. On average, an undernourished worker would find it harder
to attract employment due to her relatively lower marginal product compared to healthier
workers. This phenomenon was most typical of the economic and health conditions in
historical Europe. However, without employment and a source of income, the
undernourished worker will find difficulties in obtaining nutritious food and as a result her
health will further deteriorate. This vicious cycle then led to the so-called nutritional trap
implied in the model (Deaton, 2003).

One of the solutions to overcome this predicament was to increase agricultural productivity.
Given the low production of food throughout the eighteenth and early nineteenth century in
England and France, it was claimed that one fifth of the population was severely
malnourished and died young (Fogel, 1994). Therefore, it was necessary for food supply to
increase so a greater distribution of nutritional value over households can be achieved. It can
be inferred that throughout the nineteenth century, nutrition was a key driver of mortality
patterns.

2.2 Health in the Early Twentieth Century
On average, as more and more countries gain efficiency in food production during the
twentieth century, nutrition ceases to be the only primary factor affecting mortality. As living
standard improved, so did health services and medical technology through important
discoveries such as antibiotics and vaccines which helped to minimize fatalities from
infectious diseases (Easterlin, 1999)
5
. This progress marked the point where researchers
began to investigate other dimensions of development that can potentially explain health.

5
Easterlin (1999) also provided a rebuttal to McKeowns thesis and argues that the public health system was
instrumental in improving life expectancy through (i) prevention of the transmission of disease, (ii)
development of vaccines to prevent certain diseases and (iii) creation of new drugs to cure infectious diseases.

11

The seminal paper by Preston (1975) lends a strong argument for the intricate relationship
between level of income and mortality. He opines that living standards can generally be
reflected in the national income of a country and therefore should be regarded as an
important consideration in any study investigating the factors influencing population health.
This is later known as the absolute income hypothesis which associates average income
with the average health of the population.

One might find this hypothesis to be fairly similar to the nutrition argument discussed earlier
in terms of operation. Indeed, income is needed to acquire nutrition and nutrition is needed
to obtain work/income and therefore it can be argued that they have duplicative effects on
health. This is reasonably true except that income also operates through other channels in
which nutrition does not. For example, income enables an individual to acquire command
over health-enhancing goods such as medicine, medical services and education whereas the
same cannot be said of nutrition. Therefore, income and its influence on population health
warrant a separate discussion.

Figure 2.2 shows an updated version of Prestons scatter plot between life expectancy and
income per capita in the year 2000. The horizontal axis is GDP per capita adjusted for
purchasing power parity (PPP), the vertical axis is life expectancy and each country is
represented by a circle. The size of the circle is also proportional to the countrys total
population. This graph is not significantly different from the original created by Preston
(1975) and therefore works fairly well to capture the essence of his ideas and arguments on
the relationship between income and health.

Countries located on the left-hand side of the curve are often said to be poor countries that
are yet to undergo the epidemiological transition
6
. The transition marks the point where
deaths are more likely to occur among the elderly group of the population due to chronic
diseases such as cancers and heart ailments rather than among infants and young children

6
See Omran (1971) for a discussion on the epidemiological transition theory.
12

Figure 2.2: The Millennium Preston Curve
Source: Reproduced from Deaton et al. (2004)
13

due to infectious diseases. Further examination suggests richer countries on the right-hand
side of the curve experience smaller increases in life expectancy as income rises. One could
probably surmise from the figure that national income has a limited association with life
expectancy after a certain level of income.

Prestons observation about the concave relationship between life expectancy and income
per capita reveals the possibility that population health could be improved through income
redistribution from the rich to the poor between and within countries. The larger positive
association of income with life expectancy among the poorer countries as implied by the
concavity is supportive of the redistribution conjecture. This statistical artefact gave
impetus to a new theme in the health-income relationship which concerns itself with the
issue of inequality and is further elaborated in section 2.3.

Careful deliberation was taken, however, when interpreting the causation that flows from
income per capita to mortality. Given that national income is simply the aggregation of
output produced by the economy, expectations of a direct effect on mortality rates is
somewhat ambiguous. Rather, one would expect income to improve health indirectly
through multiple pathways such as consumption of health-related goods, education, public
sanitation facilities and investments in medical technology. It would not be surprising then if
there were little evidence of absolute income effect on health after controlling for other
socioeconomic variables that are closely correlated with income per capita. Nevertheless, it
is clear that there exists at the very least a tenuous link between income and population
health as suggested by several studies which support Prestons hypothesis (Adelman, 1963;
Rodgers, 1979; Flegg, 1982).

While acknowledging the role of income in promoting higher life expectancies, Caldwell
(1986) stresses that the former is neither a prerequisite nor a focal point for developing
countries to concern themselves with when attempting to influence population health.
Drawing experiences from Sri Lanka, Costa Rica, and the Indian state of Kerala, he identifies
14

several other alternatives to achieve low mortality and emphasizes on the equality of
material allocation within a country. Female empowerment through education and social
autonomy emerges as a strong theme in his arguments on methods to achieve better health
outcomes. Nevertheless, it is also fairly debatable that a certain level of income is probably
required for these factors to produce a significant effect on population health. For example,
improvement in female education is more likely to have a stronger influence on mortality
rates in fast-growing India as compared to poverty-stricken Congo.

Additionally, the efficiency of public health services and its availability to the poor are also
considered by Caldwell as essential elements in the pursuit of longevity. This may seem in
contrast to the statement made by McKeown about the effectiveness of public health
services but it is plausible that the time period and countries surveyed by these two authors
are quite different in fundamentals and context. Hence, the conclusions reached by them
are understandably conflicting at some points. Caldwells predisposition about the level of
importance attached to national income in reducing mortality is also echoed by Anand and
Ravallion (1993). They suggest that income growth is essential only to the extent of reducing
poverty and increasing public spending on health but it does not necessarily promote good
health directly.

On the other hand, Grossman (1972) constructed a demand model for good health and
found the level of education to be important in determining whether individuals would want
to invest more to increase their stock of health. It has been observed in the model that
educated people are more efficient in producing and maintaining their stock of health and
hence require less investment to protect their well-being. This implies that human capital in
the form of education has an implicit effect on health outcomes.

Elo and Preston (1996) also argue educational attainment affects health status and mortality
through a number of pathways. First, it influences the potential income earned by an
individual and this in turn determines her ability to acquire goods such as food, shelter and
15

health services for which health is dependent upon. Second, it operates to enhance cognitive
abilities and informational value which can be used to produce desirable health outcomes
such as longer and healthier lives. Arguments for the importance of education in health are
also forwarded in other studies (Caldwell, 1979, 1990; Kenkel, 1991; Lleras-Muney, 2005;
Schultz, 2005)
7
.

2.3 Contemporary Health
The theme of inequality operating in the context of health remains a very conscientious
issue until today. As noted earlier by Preston, the distribution of income is clearly a likely
source of variance in the basic relation between national life expectancy and average
national income. Consider the situation of two countries that have the same average
income but different levels of income distribution. One would expect the poor in a more
egalitarian society to have better access to basic medical care, education and command over
health resources as compared to the ones in a less egalitarian setting. As mortality is often
associated with the poor for obvious reasons, an unequal level of income distribution will
naturally lead to higher mortality rates
8
. Therefore, countries may differ in population health
even though they possess similar national income levels.

In a series of influential papers, Richard Wilkinson popularized the hypothesis of a negative
relationship between income inequality and life expectancy (Wilkinson, 1992, 1994, 1997).
Wilkinsons emphasis on relative income rather than absolute income seems to imply that
the main source of mortality differences among richer countries is more attributable to
psychosocial influences (stress, depression, social standing etc.) rather than material
deprivation (e.g. extreme poverty)
9
. He argues that an individuals perception of her relative
position in a social hierarchy ranked by income is the main pathway through which
inequality can affect health
10
. For instance, an individual who earns less than her peers may

7
Also see Cutler and Lleras-Muney (2006) for other mechanisms through which education can affect health.
8
Marmot (2002) provides a convincing argument for the redistribution of income from an epidemiologists
point of view,
9
See Smith (1999) for a further discussion.
10
Evidence of this is supported by the results obtained in Theodossiou and Zangelidis (2009).
16

develop an inferiority complex and feelings of dissatisfaction. This in turn could lead to cases
of depression, anxiety and even binge drinking which can affect her mental and physical
health. Empirical studies that linked income inequality and population health will be
discussed accordingly in Chapter 3.

Despite the somewhat strong arguments for the income inequality-health hypothesis, there
has been a considerable amount of literature questioning its validity. Deaton (2003)
considers that there are no strong reasons to believe there exists a direct link from income
inequality to mortality. Much of this skepticism is instigated by the use of poor quality data
of income inequality which tends to raise doubts about the empirical results obtained.
Additionally, a comprehensive review by Lynch et al. (2004) evaluates the empirical evidence
of approximately 90 studies investigating the relationship between income inequality and
health
11
. Not surprisingly, they conclude that income inequality is not significantly correlated
with population health, at least not among affluent countries such as Australia, Belgium,
Canada, Denmark, New Zealand, Spain, Sweden and Japan.

Besides inequality, other dimensions of health and socioeconomic conditions were also
examined. For example, there are suggestions that mental health in the form of depression,
anxiety and dementia may be the result of urbanization and demographic changes in the
society (Harpham, 1994; Levkoff et al., 1995). Meanwhile, in a study across 140 countries,
Deaton (2009) proposes a causal framework to investigate the relationship between religion
and health. He reports that religious people, on average, tend to be in better health,
experience less pain and have healthier social lives. Other variables have also been proposed
but the lack of theoretical frameworks to defend their relevance renders their discussion
more appropriate in the next chapter.

11
Wilkinson and Pickett (2006) attempt a similar exercise by reviewing 155 papers and find general support for
income inequality as a determinant for population health.
17

2.4 Summary
In the last two centuries, population health has improved significantly due to several factors.
However, there are distinct channels to which health were influenced in three different time
periods. Nutrition played an important role in reducing mortality during the nineteenth
century. People tend to live longer when they have access to food supply and a good balance
of nutritional intake. However, in the early twentieth century, income displaces nutrition to
become a prominent socioeconomic influence on health. Debates about incomes direct
effect on health still persist but many would not argue a link exists between them.
Contemporary issues today concern on effects of health inequality between and within
countries and it is a subject that has invited lively discussions and disagreements among
academics, researchers and policy-makers. The absence of a strong theoretical model(s) to
support all these suppositions is further complicated by the fact that health is multi-
dimensional and difficult to measure. The next chapter will discuss econometric regressions
in the literature that investigate health and its related aspects. They are often utilized with
the objective of supporting the underlying theories or more appropriately to compensate for
the lack of them.

18

Chapter 3: Review of Health Regression Studies
There have been numerous attempts in the empirical literature to analyze population health
determinants within and across countries. A large number of studies employed regressions
to test potential variables that could affect health though many of them differ in
specifications and results. The objective of this chapter is therefore to review and evaluate
the existing evidence pertaining to health determinants in order to establish the basic
framework for a proposed basic health regression model in Chapter 4. Generally, the
determinants that are often associated with population health can be broadly grouped into
economic, political and social variables. More specifically, they are under the categories of (i)
economic development, (ii) human capital, (iii) health resources and (iv) governance. The
chapter discusses the empirical studies in each category accordingly.

Before proceeding, it is useful for the reader to be aware of the different approaches used in
population health studies. Since the literature involves the works of researchers and
academicians from various disciplines, certain norms and conventions with regards to data
quality and empirical estimation are not necessarily the same and at times they might even
be contradicting. Therefore, empirical results will differ across studies and this in turn may
render comparative analysis of existing findings inconclusive. However, the reader need not
be overly concerned with this issue as the overall aim here is to identify population health
determinants that are considered significant in the majority of the literature.

3.1 Economic Development
Both income per capita and population health indicators have improved globally over the
last two decades. Figure 3.1 and 3.2 shows the trend of GDP per capita (2000 $) and under-5
mortality rates for different regions of the world respectively. In particular, the developing
countries have made progress in increasing the level of income and lowering mortality. Even
in the absence of empirical evidence, apriori expectation of interdependence between
income and health suggests that a linkage should exist.

19

Figure 3.1: GDP per Capita (2000 $), 1990-2008

Source: World Development Indicators Report 2010.

Figure 3.2: Under-5 Mortality (per 1,000), 1990-2008

Source: World Development Indicators Report 2010.

Following Preston (1975), Rodgers (1979) models population health (measured by life
expectancy and infant mortality) as a function of income and income inequality. He found
both variables to be associated with better health in a sample of 56 countries. The effect of
20

income inequality is especially strong with average life expectancy being up to ten years
higher in a relatively egalitarian country than a relatively inegalitarian one. Similar findings of
an association between income and population health were also reported by Pampel and
Pillai (1986) and Wennemo (1993).

Although the above studies have shown that income is significant in a regression where
health is the dependent variable, an obvious problem in this relationship is the endogeneity
of income. Income is most likely to be endogenous to health because of two reasons. First,
better health could lead to a higher income (reverse causation). Healthier individuals tend to
be more productive at work and attract more employment opportunities than those who are
not. Second, a third variable may be determining both income and health (incidental
association). If the third variable is neither included nor controlled for in the regression
model, then the estimated coefficient of income in a health regression would create a
spurious relationship between income and health.

A number of studies attempt to address this issue. Pritchett and Summers (1996) are among
the first ones to account for income endogeneity by using instrumental variable estimation
(IV) in their investigation of income effect on health. They claim that the use of exogenous
growth determinants in the health regression model removes any effects of reverse
causation and incidental association thus enabling a causal relationship to be established
between income and health. Terms of trade, ratio of investment to GDP, black market
premium foreign exchange and the distortion of price levels are identified as plausible
instrumental variables which are determinants of growth but exogenous to health. Based on
the IV estimation, they conclude that income elasticity of infant and under-5 mortality in
developing countries are significant and between -0.2 and -0.4.

Some have argued that the direct effect of income on health will be rendered irrelevant if
other potential explanatory variables are included in the regression equation. For instance,
Flegg (1982) found real gross domestic product per capita to be insignificant when
21

controlling for female education and the number of physicians in a study of infant mortality
differences across 46 underdeveloped countries. Kakwani (1993) admits that there are other
factors besides income which improve life expectancy over time. Nevertheless, this does not
imply that the level of income is unimportant in the determination of population health.
Indeed, it is more likely that income per capita lowers mortality indirectly by improving the
ability of households to purchase better food, shelter and medical care.

An often controversial issue in the study of population health is the significance of income
inequality measures. A high degree of Income inequality is often linked to poverty because
the inequity in the distribution of wealth within a country tends to create a disparity of
purchasing power between the rich and the poor. The disparity tends to diminish the ability
of the poor to afford basic necessities and health care. Because of this, mortality rates can
increase as shown earlier in the findings of Rodgers (1979). Waldmann (1992) examines the
relationship between infant mortality and share of the top 5 percent of the household
income distribution across 70 countries and concludes that a greater share of income going
to the rich is correlated with higher infant mortality. Therefore, a positive association is
claimed to exist between the two thus implying a negative effect of income inequality on
health
12
.

McIsaac and Wilkinson (1997) add further empirical evidence to the income inequality
hypothesis by suggesting that a more egalitarian distribution of income is related to lower
mortality in a study of 13 OECD countries. They analyze several measures of income
distribution against age-, sex- and cause-specific mortality and found most of them to be
statistically significant. Ram (2006) replicates the findings by Rodgers (1979), Flegg (1982)
and Waldmann (1992) with the use of more recent data and reports a negative association
between income inequality and population health even after controlling for ethnic
heterogeneity. In addition, there is evidence to suggest that the effect of income inequality

12
Duleep (1995), Kaplan et al. (1996) and Kennedy et al. (1996) also find supportive evidence in U.S. mortality
data that shows an inverse relationship between income inequality and population health.
22

is greater in developed countries than in developing countries. A similar result for wage
inequality is also obtained by Macinko et al. (2004) for a sample of 19 OECD countries.

Nevertheless, there exists a large body of literature that challenges the significance of
income inequality as a determinant of health across countries. For example, Judge et al.
(1998) fail to find any strong evidence supporting the association between income inequality
and population health in rich industrialized countries. They argue that there may be two
reasons as to why their results differ from previous studies. First, there is a possibility of
publication bias in which researchers are inclined to favor the reporting of positive results
due to the belief that this will increase the chances of their work being published in
academic journals. Therefore, studies supporting the income inequality hypothesis have the
propensity to appear more frequently. Second, the development of better quality income
distribution data has increased the degree of cross-country comparability and estimation
precision. Judge et al. believes past studies which conclude that income inequality is
significantly correlated with population health may have reported a spurious result due to
the usage of relatively inferior data.

Mellor and Milyo (2001) are equally doubtful of other studies claiming income inequality as
an important determinant of population health
13
. According to them, most of these studies
are cross-sectional investigations and use few control variables. For that reason, the effect of
income inequality on health over time is not explored and there may be other hidden
variables that determine both income inequality and health which are not considered. To
this end, Mellor and Milyo further examine the issue across 30 countries over four decades
and across 48 U.S. states over five decades. In addition, they account for previously omitted
variables by including control in their equation and also by employing differencing
techniques. They conclude that the association between income inequality and population
health is not robust and instead in many cases income inequality has been shown to be
positively correlated with better health outcomes.

13
Lynch et al. (2004) review 98 similar studies and find little support for the income inequality hypothesis.
23

3.2 Human Capital
Knowledge is arguably one of the crucial elements in human capital that drives income
growth in the long-run. This is obvious as the production function found in most
macroeconomic textbooks account for some form of human capital (sometimes described as
the augmented labor component). Considering the previous discussion about the
relationship between income and population health, it is perhaps reasonable to assume that
knowledge or education should also have some form of a connection with health indicators
such as life expectancy and infant mortality
14
. However, there is also a positive effect of
education on population health which is independent of income as demonstrated in several
studies.

Caldwell (1979) argues for role of education in health and claims maternal education in
Nigeria to be the single most powerful determinant of the level of child mortality based
on an investigation of two health surveys undertaken in two Nigerian districts. He suggests
that there are three pathways in which maternal education can have a significant impact on
child mortality. First, educated mothers are more open to adopting modern practices in child
care and therapeutics. Since traditional practices are not optimal, an educated mother can
improve nutrition, feeding and other aspects of child care by applying modern practices
without incurring additional costs on the household. Hence, the education effect of reducing
child mortality is independent of income. Second, educated mothers are capable of
understanding and utilizing the available resources to their advantage. For instance, they are
aware of the existence of medical institutions and facilities which can provide preventive and
curative services for their sick children. Third, education empowers and informs women of
their rights. An educated mother is more likely to feel personal responsibility and will
attempt to influence the family structure and relationship for the benefit of her dependents.
These three factors bring about a positive effect of female education on population health.

14
Both Flegg (1982) and Pampel and Pillai (1986) find female education to be strongly associated with
mortality,
24

Hobcraft et al. (1984) extends the investigation to 28 developing countries and concludes
that mothers education is strongly associated with child mortality in comparison to other
variables such as income and type of residence. Kenkel (1991) suggests that education
encourages individuals to adopt healthier lifestyles by improving their knowledge of the
relationship between health behaviors and health outcomes. In a study of 72 developing
countries, Subbarao and Raney (1995) found female education to be particularly important
in reducing infant mortality rates and the effect is especially greater if the country has a low
level of female secondary school enrollment.

A similar observation for developed countries is also evident in several studies. Deaton and
Paxson (1999) review individual data and panel of aggregate birth cohorts in the United
States from 1975 to 1999 and disentangle the association between income and education by
exploiting the time-series component in their data. They suggest both income and education
have a separate effect on mortality and further note that the effects differ with gender, age
and time.

Cutler and Lleras-Muney (2006) attempt to establish a relationship between education and
health by estimating a regression model in which an individuals health or health behavior is
a function of years of education completed and a vector of individual characteristics that
includes race, gender and age. Data from national health surveys in the United States were
used to supplement their arguments and although there were no conclusive evidence in
their discussion as to which exact mechanism or causality is underlying the relationship, it is
fairly obvious to them a convincing link exist empirically
15
. Similar findings are reported by
Muller (2002) in a cross-national study of U.S. states and von dem Knesebeck et al. (2006) in
a cross-section analysis of 22 European countries.

15
Also see Christenson and Johnson (1995) for an examination of educational differences in mortality. They
claim that progression from primary to secondary schooling is associated with reduction in mortality rates.
25

3.3 Health Resources
Another explanation of population health is related to the availability of health resources.
Health resources in the context of this discussion can be defined as the aspects of
infrastructure, government expenditure and human resources that are related to
improvements in population health. The following is a review of several studies that
investigate the relationship between health resources and population health.

The availability of clean water supply and sanitation facilities has often been associated with
better health outcomes. Cutler and Miller (2005) suggest that the access to clean water and
the adoption of filtration/chlorination technologies are responsible for almost half of the
total reduction in mortality rates in major cities across the United States during the early
twentieth century. Likewise, Cain and Rotella (2001), in a pooled cross-section regression
model, find expenditures on water, sewers and refuse collection to have a large impact on
mortality rates in 48 U.S. cities during the late nineteenth and early twentieth century.

On the other hand, Anand and Brnighausen (2004) perform cross-country regression
analyses for a sample of 118 countries to investigate the link between human resources for
health and health outcomes. Using maternal mortality rate, infant mortality rate and under-
5 mortality as dependent variables, they found the aggregate density of human resources for
health (doctors, nurses and midwives) to be a significant explanatory variable after
controlling for income, female adult literacy and absolute income poverty
16
. Analogous
results are also obtained in other related studies which also attempt to control for health
resources endogeneity by performing longitudinal analysis or instrumental variables
estimation (Or et al., 2005; Farahani et al., 2009).

Results are mixed, however, for the role of government health expenditure in population
health. Filmer and Pritchett (1999) find public spending on health to have little effect on
infant mortality and under-5 mortality in their multivariate regression model. The coefficient

16
Similar results are achieved for a sample of 155 countries in Robinson and Wharrad (2000).
26

estimate is both small and statistically insignificant while the independent variation in public
health spending explains less than one-seventh of 1% of the observed differences in
mortality across countries. Similarly, McGuire (2006) reports that public health spending
does not show any significant association with under-5 mortality in two cross-sections of
developing countries. He believes the reason for the weak association may be due to the fact
that the contribution of maternal and child health interventions is not captured in the data
for public health care spending. These two types of intervention are arguably the most
effective in reducing mortality but because they are relatively inexpensive compared to
other health programs, their share in the overall public health spending is insignificant thus
weakening the relationship between public health spending and under-5 mortality.

In contrast, Martin et al. (2008) obtain evidence to support the marginal benefit of public
health care spending on population health. Using data from the English health care
programme budget, they are able to examine the relationship between aggregate
expenditure in a programme of care and the health outcomes achieved. Their result suggests
that health care expenditure has a strong positive effect on disease-specific mortality rates
such as deaths from circulatory disease or cancer. In addition, Nixon and Ulmann (2006)
analyze a panel data set for countries in the European Union over the period 1980 to 1995
and find a significant relationship between increases in health care expenditure and
reduction in infant mortality. Life expectancy is also shown in their study to be positively
related to health care expenditure albeit only marginally
17
.

3.4 Governance
The World Bank (1991) has defined governance as the manner in which power is exercised
in the management of a countrys economic and social resources for development.
Naturally, the political system and the quality of formal institutions of a country are
subsumed under this definition. There are arguments that the efficiency of public health
systems, economic growth and education is actually a reflection of the underlying

17
Crmieux et al. (1999) also show health care spending to be statistically significant and related to life
expectancy and infant mortality in Canada.
27

characteristics prevailing in the governing system. For example, the quality of basic public
provision of health care services is partly dependent upon the level of bureaucracy and
corruption within the government. If the prevailing institutions at that time are bureaucratic,
inefficient and corrupt, there may be a mismanagement of funds allocated for health care
and this in turn will negatively affect the overall effectiveness of the public health provision.

Govindaraj and Rannan-Eliya (1994) analyse the correlation between political systems and
health status in a cross-sectional study of 165 countries. They conclude that, after controlling
for income per capita, democratic countries have better health outcomes (represented by
infant mortality and life expectancy) than their non-democratic counterparts. Likewise,
Franco et al. (2004) control for income per capita, level of income inequality and size of the
public sector and find democracy to have a positive effect on maternal mortality, infant
mortality and life expectancy for a sample of 170 countries
18
.

In addition, Besley and Kudamatsu (2006) find sufficient evidence to support the positive
correlation between democratic institutions and life expectancy from the study of panel
data across 160 countries. The robust association is still present after controlling for
education, political history and country-fixed effects thus implying the importance of formal
institutions in influencing population health.

Knowles and Owen (2008) propose a deep determinant perspective to investigate
population health and employ life expectancy as an indicator of economic development.
Results concluded from their study seem to suggest that formal institutions, often regarded
as the enforcement of written rules and regulations, improve health status
19
. With this line
of reasoning, it is fair to suggest that the protection of property rights and the rule of law
which are often connected to the quality of governance should be considered as a potential
population health determinant.

18
For more evidence of democratic benefits for health, see Shandra et al. (2004) and Klomp and de Haan
(2009).
19
The formal institutions as discussed in North (1990).
28

3.5 Summary
The four categories of economic development, human capital, health resources and
governance which dominate health regression studies over the last half decade are distinct
and yet linked in certain ways. The level of income received tremendous support as a health
determinant only because it works indirectly through other channels of operation such as
nutrition, education and health expenditure. Debates still persist about the effect of income
inequality on health but it evokes substantial evidence for it to be considered as a potential
population health determinant. Education is perhaps the strongest among all potential
determinants in terms of significance and is present in almost every health regression either
as an explanatory variable or a control variable. The availability of health resources
especially the density of physicians seems to play an equally important role in influencing
mortality. Good formal institutions in the form of democratic political system also have a
positive effect on health as shown in previous discussions. The next chapter will formalize
some of these potential population health determinants in a basic health regression model.

29

Chapter 4: Preliminary Estimations and Diagnostics
This chapter will use a basic health regression model to investigate the statistical
relationship between a select group of potential health determinants and three health
indicators; life expectancy, infant mortality and under-5 mortality. The purpose of this
exercise is to determine whether these potential determinants should enter the extreme
bounds analysis as the always included regressors. The extreme bounds analysis (EBA) is
an empirical technique used to assess the robustness of a variable of interest when the set
of explanatory variables on the right-hand side changes. The always included regressors
are the variables that will appear in every regression estimated under the procedure. A more
detailed explanation of EBA will be provided in Chapter 5.

The organization of this chapter is as follows. It begins with a brief introduction of the basic
health regression model followed by the definition of the dependent and independent
variables. Next, data sources and the method of averaging data are explained. Then, the
expected relationship between the variables will be examined through the use of scatter
plots. The chapter concludes by discussing result of the estimated regression model and its
corresponding diagnostic tests.

4.1 The Basic Health Regression Model
As a starting point, a basic health regression model will be developed to assess the statistical
significance of several independent variables. Based on most empirical studies and
population health theories, gross domestic product per capita (GDP), equality of income
distribution (GIN), level of female education (EDU) and access to safe water (WAT) have
been identified as variables that are consistently included in health regressions. In addition,
the dummy variable for sub-Saharan African countries (AFR) is included to control for African
countries that have severe poverty cases and high prevalence of the HIV/AIDS disease. Using
ordinary least squares, equation (1) will be estimated to represent the basic relationship
between health and its potential determinants:
30

(1) B
t
= [
0
+ [
1
ln(uBP
t
) + [
2
uIN
t
+ [
3
EB0
t
+ [
4
WAT
t
+ 0
1
AFR
+ c
t

Where:
B = Health indicators such as life expectancy, infant mortality or under-5 mortality
e = Error term
t = Time interval
i = Country index
At this stage, a few other potential health determinants will not be included in the
regression and they are number of physicians (PHY), health expenditure per capita (EXP),
urbanization (URB), and governance quality (GOV). There are two reasons for their exclusion
in this phase of estimation. First, these variables are relatively less popular in the empirical
literature and hence serve better instead as variables of interest in the extreme bounds
analysis (EBA). Second, there exists a degree of collinearity between the variables included
and not included. For example, both GDP and EXP are highly correlated (r=0.93) and hence
the estimation results may be biased if the two are entered simultaneously in the equation.
Consequently, it is sensible to exclude certain variables from the basic health regression
model for the purpose of this chapter.

Another equally important point to address here is that the above model does not explicitly
account for causality. It is fairly understood that any conclusion derived from the estimation
of this model will be subjected to the problem of endogeneity if no proper controls or
instruments are used. This is especially true when one considers for example the possible
two-way relationship between income and health where the former is determining and
being determined by the other. However, as mentioned earlier in the introduction chapter,
the thesis is more focused on examining the associative relationship between a particular
variable and population health rather than establishing any causal effect between them. For
this reason, even though the endogeneity problem is acknowledged, it will not be dealt with
extensively because it is not a major concern in the context of this research.

31

4.2 Explanation of Dependent and Independent Variables
The three health indicators which will be used are taken from the World Banks World
Development Indicator (WDI) database: (i) life expectancy (LFE), defined as the number of
years a newborn infant is expected to live based on the pattern of mortality (which is
assumed to be constant throughout its lifetime) at the time of its birth, (ii) infant mortality
(IFM) defined as the number of infant deaths occurring before they reach one year of age for
every 1,000 live births per year and (iii) under-5 mortality measured as the probability per
1,000 that a newborn baby will die before the age of five based on the current age-specific
mortality rates.

The independent variables (also taken from the WDI unless otherwise indicated) are defined
as follows. Gross domestic product per capita (GDP) is the total gross value produced by the
economy divided by the total population of the country and is denoted in constant 2000 US
dollars. Generally, it implies the level of income or purchasing power possessed by
individuals and households. The Gini coefficient (GIN) is an index developed to measure the
pattern of income distribution and its deviation from a perfectly equal distribution. A value
of zero signifies complete equality while a value of 100 represents complete inequality. The
data for GIN is derived from the World Income Inequality Database (WIID), Version 2.0c,
May 2008 which is maintained by the World Institute for Development Economics Research
of the United Nations University (UNU-WIDER).

EDU is the proxy for the level of education (primary, secondary and tertiary included). It
specifies the average years of total schooling attained by the female population aged 25
years and above (Barro and Lee, 2010). The level of access to safe water (WAT) is defined as
the percentage of the population with reasonable access to a sufficient amount of water
from an improved source such as a household connection, protected well or spring and
rainwater collection. The African dummy variable (AFR) is based on the World Banks
classification of sub-Saharan African countries.

32

PHY is defined as the number of physicians (including general practitioners and specialists)
for every 1000 persons in a country. Health expenditure per capita (EXP) is the ratio of public
and private health expenditure to the total population. Expenditure includes the provision of
health services, family planning and nutrition activities by individuals and households, and
emergency aid allocated for population health. The data for this variable is denoted in
constant 2005 international dollars after correcting for purchasing power parity.
Urbanization (URB) measures the percentage of the total population living in urban areas.
The definition of urban areas is determined by the respective national statistical offices in
each country.

Governance quality (GOV) is an index of which covers six dimensions of governance namely
voice and accountability, political stability & the absence of violence/terrorism, government
effectiveness, regulatory quality, rule of law and control of corruption. These governance
indicators are essentially the statistical compilation of survey results on the quality of
governance gathered from various types of respondent which include enterprises,
institutional bodies and citizens of both developed and developing countries. The data for
this variable is measured in numerical units ranging from the lowest (-2.5) to the highest
(2.5). A higher value denotes a better governance outcome. The source for GOV originates
from the Worldwide Governance Indicators (WGI) project under the auspices of The World
Bank.

4.3 Data Averaging
The sample used for estimation consists of observations on 95 countries over the period
1960 and 2008. The sample period is split into two subperiods. The period from 1960 to
1985 is treated as a lag interval and hence will be denoted with the subscript 0. The period
from 1986 to 2008 is referred to as the current interval and will be denoted with the
subscript 1. For instance, GDP
0
is the past value of the gross domestic product per capita
while GDP
1
is the equivalent value of the present. Therefore, provided that sufficient data is
available, there will be two observations for a particular variable in the sample set. The
33

reason for splitting the data into two subperiods is because it allows the extreme bounds
analysis (EBA) to produce estimations for two different periods so that a comparative
analysis over time can be made. Chapter 5 will accordingly present the result for this
exercise. However, to economize space in this chapter, the focus here is on the current
interval only.

For each country, data are averaged over the two subperiods, as illustrated in Figure 4.1. As
shown in the calculation of GDP in the diagram, the value of the denominator is dependent
upon the total observations that are available in each subperiod. For example, in the case of
Japan (shown here), 26 observations and 23 observations were obtained for the lag interval
and current interval respectively. This method of averaging GDP applies for other variables
of interest as well. There are several reasons as to why averaging is preferred to other
methods of presenting data. First, averaging is a standard procedure used in the literature.
Second, it removes any short-term effect that might be present in the data. Third, due to
unbalanced observations in the annual data among countries, averaging can help to
construct a more balanced dataset.

A special mention should be given to the procedure used to obtain values of governance
quality (GOV) as it is slightly different from the calculation of other variables. The six
dimensions of governance, as discussed earlier, contain observations over the period 1996
and 2008 and therefore require two averaging processes in order for them be incorporated
in the basic health regression model. Figure 4.2 shows the procedure to determine the value
of GOV for Malaysia. The overall aim of this exercise is to create a fairly representative
aggregate indicator of governing quality that can be used to compare between countries.
Table 4.1 shows the summary statistics of all the variables and their respective measurement
unit.
34

Figure 4.2: GOV Calculation for Malaysia Figure 4.1: The GDP Intervals and Calculations for Japan
35

Table 4.1: Summary Statistics of All Variables

Note: The summary statistics above are for the period between 1986 and 2008 (current interval).
36

4.4 Expected Relationships between Variables
One would generally expect any increases in GDP per capita (GDP), health expenditure per
capita (EXP) and number of physicians (PHY) to improve the ability of individuals and
households to acquire goods and services which are beneficial for their health. Thus, these
variables contribute favourably to life expectancy and reduce mortality. Investments in
female education (EDU) meanwhile is predicted to have a positive effect on future income
and this in turn will enable a greater command over basic necessities such as food, water
and shelter. EDU also assist in the diffusion of basic health knowledge which can help to
encourage the adoption of good dietary habits and preventive measures against diseases.
Overall, EDU will have a positive relationship with population health.

With water being an important source of life, access to clean water (WAT) is most likely a
crucial element in ensuring population survival and hence is important in predicting
mortality. In addition, the provision of clean water helps to create hygienic and sanitary
living conditions which can reduce the virulence of disease-producing pathogens such as
bacteria and viruses. Meanwhile, a high level of urbanization (URB) is frequently linked with
the ease of access to medical treatments, hospitals and other health amenities. The
affluence of these facilities in a highly populated area enables the sick to be treated early
and effectively.

Governance quality (GOV) reflects the efficiency of public goods distribution within a country
and is often crucial in making public health programs readily accessible to those in need.
Therefore, a good governance system in place ensures policies and public institutions are
able to achieve their objectives and this in turn will improve population health interventions
and programs. A higher value of GOV denotes a better governance outcome.

Gini index (GIN) is a measure of the income gap between the rich and the poor. A high state
of inequality will often imply a dominant control of the countrys resources by a small group
of the population while leaving the rest with few social benefits. In many cases, the rich has
37

little incentive to provide public goods (including health) to the poor if the former can
comfortably afford private goods and services. As a result, the rich would naturally resist any
form of public health measure that is not within their interest. In the absence of an effective
interventionist policy by the government, a high value of GIN is often associated with an
increase in poverty and poor population health. However, there are also situations when
income inequality can lead to better health. For example, if the poor in a democratic society
forms the majority of the population (implying high income inequality), they are more likely
to vote for the government that will provide the largest amount of public good. Assuming
that this effect dominates, income inequality will then be associated with higher public
health expenditure (e.g construction of hospitals) and perhaps better health outcomes. For
the purpose of this thesis, however, GIN is expected to be negatively associated with health.

Some preliminary stylized facts on the relationship between the three health indicators and
the independent variables can be determined from simple bivariate scatter plots. Figure 4.3
shows scatter diagrams depicting the relationship between life expectancy (LFE
1
) and each
of the independent variable. It is apparent that GDP
1
, EDU
1
, WAT
1
, PHY
1
, EXP
1
, URB
1
and
GOV
1
share a positive relationship with life expectancy while the inverse relationship is true
for GIN
1
. This corresponds with the population health theories and regressions discussed
earlier in Chapter 2 and Chapter 3.

Figure 4.4 presents scatter plots with infant mortality (IFM
1
) on the y-axis and the respective
independent variables on the x-axis. Similarly, Figure 4.5 displays under-5 mortality (UFM
1
)
on the y-axis and the respective independent variables on the x-axis. Since both infant
mortality and under-5 mortality measure the same dimension of population health, they
share identical relationships with respect to other independent variables. As expected, GDP
1
,
EDU
1
, WAT
1
, PHY
1
, EXP
1
, URB
1
and GOV
1
are negatively correlated with both mortality
indicators while GIN
1
is positively correlated. Again, this is line with expectations. Table 4.2
shows a brief summary of the relationships between the population health indicators and
the independent variables.
38
30
40
50
60
70
80
90
4 5 6 7 8 9 10 11
GDP PER CAPITA (LOG)
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
30
40
50
60
70
80
90
20 30 40 50 60 70 80
GINI INDEX
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
30
40
50
60
70
80
90
30 40 50 60 70 80 90 100
ACCESS TO SAFE WATER
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
30
40
50
60
70
80
90
0 1 2 3 4
NUMBER OF PHYSICIANS
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
30
40
50
60
70
80
90
0 2 4 6 8 10 12 14
FEMALE EDUCATION
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
30
40
50
60
70
80
90
0 1 2 3 4 5 6 7 8 9
HEALTH EXPENDITURE PER CAPITA (LOG)
L
I
F
E

E
X
P
E
C
T
A
N
C
Y

Figure 4.3: Scatter Plots of Life Expectancy and Independent Variables
(a) Correlation = 0.8481
(b) Correlation = -0.4816
(c) Correlation = 0.7768
(d) Correlation = 0.8195
(e) Correlation = 0.7370 (f) Correlation = 0.8300
39
30
40
50
60
70
80
90
0 20 40 60 80 100
URBANIZATION
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
30
40
50
60
70
80
90
-2 -1 0 1 2
GOVERNANCE
L
I
F
E

E
X
P
E
C
T
A
N
C
Y
0
20
40
60
80
100
120
140
160
4 5 6 7 8 9 10 11
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
20 30 40 50 60 70 80
GINI INDEX
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
0 2 4 6 8 10 12 14
FEMALE EDUCATION
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y

(g) Correlation = 0.7079 (h) Correlation = 0.7014
Figure 4.4: Scatter Plots of Infant Mortality and Independent Variables
(a) Correlation = -0.8406 (b) Correlation = 0.4017 (c) Correlation = -0.8019
40
0
20
40
60
80
100
120
140
160
30 40 50 60 70 80 90 100
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
0.0 0.2 0.4 0.6 0.8 1.0
ETHNIC FRACTIONALIZATION
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
0 1 2 3 4
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
0 20 40 60 80 100
URBANIZATION
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
-2 -1 0 1 2
GOVERNANCE
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y
0
20
40
60
80
100
120
140
160
0 1 2 3 4 5 6 7 8 9
I
N
F
A
N
T

M
O
R
T
A
L
I
T
Y

(d) Correlation = -0.8291 (e) Correlation = 0.6010 (f) Correlation = -0.7116
(g) Correlation = -0.8188 (h) Correlation = -0.655 (i) Correlation = -0.7199
41
0
40
80
120
160
200
240
4 5 6 7 8 9 10 11
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y
0
40
80
120
160
200
240
20 30 40 50 60 70 80
GINI INDEX
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y
0
40
80
120
160
200
240
30 40 50 60 70 80 90 100
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y
0
40
80
120
160
200
240
0 1 2 3 4
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y
0
40
80
120
160
200
240
0 2 4 6 8 10 12 14
FEMALE EDUCATION
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y

Figure 4.5: Scatter Plots of Under-5 Mortality and Independent Variables
(b) Correlation = 0.4114 (a) Correlation = -0.8106 (c) Correlation = -0.7858
(d) Correlation = -0.8400 (e) Correlation = -0.6489
42
0
40
80
120
160
200
240
0 20 40 60 80 100
URBANIZATION
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y
0
40
80
120
160
200
240
-2 -1 0 1 2
GOVERNANCE
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y
0
40
80
120
160
200
240
0 1 2 3 4 5 6 7 8 9
U
N
D
E
R
-
5

M
O
R
T
A
L
I
T
Y

Table 4.2: Relationships between Population Health Indicators and Independent Variables
VARIABLE
CODE
INDEPENDENT VARIABLE
DEPENDENT VARIABLE
Life expectancy
(LFE)
Infant mortality
(IFM)
Under-5 mortality
(UFM)
GDP Gross domestic product per capita Positive Negative Negative
GIN Gini index Negative Positive Positive
EDU Female education Positive Negative Negative
WAT Access to safe water Positive Negative Negative
PHY Number of physicians Positive Negative Negative
EXP Health expenditure per capita Positive 3Negative Negative
URB Urbanization Positive Negative Negative
GOV Governance quality Positive Negative Negative
(f) Correlation = -0.7922 (g) Correlation = -0.6382 (h) Correlation = -0.6658
43

4.5 Some Preliminary Estimations and Diagnostic Results
Table 4.3 reports the regression results of equation (1) for the dependent variables life
expectancy (LFE
1
), infant mortality (IFM
1
) and under-5 mortality (UFM
1
). All of the
independent variables and dummy variable were of the expected sign except for the Gini
index (GIN
1
)
20
. The log of GDP per capita (GDP
1
) is consistently significant at the 1% level
across all three health indicators and implies the importance of income in explaining
population health.

Female education (EDU
1
) and access to safe water (WAT
1
) are significant in the model and
evidence is especially stronger for both infant and under-5 mortality at the 1% level of
significance. One possible reason is because maternal education plays an important role in
the development of newborns and young infants. Educated mothers tend to be more
conscious in promoting a healthy growing environment for their children to live in and this
has a beneficial effect of reducing mortality. While both EDU
1
and WAT
1
are significant when
the dependent variable is life expectancy, they are however only significant at 5% and 10%
level respectively.

The strong significance of the dummy variable for sub-Saharan African countries (AFR) seems
to suggest a regional effect on population health. The effect is especially large as indicated
by the value of its coefficient where life expectancy, on average, being approximately 11
years lower if a country originates from the sub-Saharan African region. Additionally, these
countries experience higher rates of mortality with the difference being on average as high
as 62 deaths for under-5 mortality. This could be attributed to Africas extreme cases of
poverty and high prevalence of the HIV/AIDS disease.

The R
2
for the model with LFE
1
as the dependent variable is equal to 0.91 implying that
variations in the independent variables can account for 91% of the cross-country variation in
life expectancy. Similarly, the IFM
1
and UFM
1
models recorded high values of R
2
at 0.88 and

20
Nevertheless, as discussed previously in section 4.4, there can be a positive relationship between the Gini
index and population health and this in turn implies a priori the sign of GIN

is ambiguous.
44

Table 4.3: Regression Result of Equation (1)
Dependent variable
Life expectancy (LFE
1
) Infant mortality (IFM
1
) Under-5 mortality (UFM
1
)

Constant term (C) 39.60 (2.79)*** 144.96 (13.43)*** 215.24 (20.52)***

GDP per capita (log) (GDP
1
) 2.68 (0.41)*** -6.69 (1.54)*** -7.51 (2.40)***
Gini index (GIN
1
) 0.02 (0.03) -0.30 (0.13)** -0.50 (0.22)**
1
) 0.41 (0.16)** -2.67 (0.74)*** -4.17 (1.00)***
Access to safe water (WAT
1
) 0.07 (0.04)* -0.39 (0.12)*** -0.83 (0.23)***
African dummy variable (AFR) -11.04 (1.24)*** 31.76 (4.33)*** 62.94 (7.62)***

Observations 88 88 88
R-squared 0.91 0.88 0.89
Figures in parentheses are standard errors.
Significance at 1%, 5% and 10% level are denoted with ***, **, and * respectively.
All standard errors are White-heteroskedasticity-consistent.
45

0.89 respectively indicating a good fit between the estimated regressions and the data.
Hence, the inclusion of these independent variables in the basic health regression model is
justified based on their explanatory power.

Since the measurement units are different, the relative strength of each independent
variable could not be determined directly from Table 4.3. In order to investigate their
relative importance, these variables have to be standardized so all of their variances have
the value of 1. Accordingly, Table 4.4 shows the standardized beta coefficients for the five
independent variables based on equation (1).

Table 4.4: Standardized Beta Coefficients

Dependent variable

Life expectancy
(LFE
1
)
Infant mortality
(IFM
1
)
Under-5 mortality
(UFM
1
)
1
) 0.40 -0.30 -0.20
Gini index (GIN
1
) 0.02 -0.11 -0.12
1
) 0.13 -0.24 -0.23
1
) 0.11 -0.20 -0.25
African dummy variable (AFR) -0.48 0.41 0.49

It appears that the African dummy variable (AFR) has the strongest effect while the Gini
index (GIN
1
) has the lowest among all independent variables. The log of GDP per capita
(GDP
1
) features more prominently for the life expectancy and infant mortality regressions in
comparison to female education (EDU
1
1
). The regression
with under-5 mortality as the dependent variable sees a generally equal share of magnitude
between GDP
1
, EDU
1
and WAT
1
. Notwithstanding the role of AFR and GIN
1
, the standardized
beta coefficients match the common expectations regarding the relative importance of each
explanatory variable with respect to the three health indicators.

46

4.5.1 Possible Collinearity between Gini Index and other Explanatory Variables
A correlation matrix is constructed to investigate whether the incorrect sign for the Gini
index (GIN
1
) in all three regressions is possibly related to the effects of collinearity between
GIN
1
and other explanatory variables. Table 4.5 shows the sample correlation coefficient
matrix for all explanatory variables except the African dummy variable (AFR).

Table 4.5: Correlation Matrix
Variable
GDP per capita
(log) (GDP
1
)
Gini index
(GIN
1
)
Female
education
(EDU
1
)
Access to
safe water
(WAT
1
)
1
)
Gini index (GIN
1
) -0.46
1
) 0.62 -0.42
1
) 0.54 -0.42 0.70

From the table, the Gini index does not seem to be highly correlated with the log of GDP per
capita, female education or access to safe water. Although this examination failed to provide
a solution to the problem of GIN
1
having the wrong sign for its coefficient, its modest
correlation with others implies a variation in GIN
1
that could potentially explain the
dependent variables without succumbing to the collinearity effect. In other words, the Gini
index could still be a potential population health determinant in this set of independent
variables despite its coefficient sign being inversed.

To further investigate the problem, an auxiliary regression is performed with the Gini index
as the dependent variable and the rest of the explanatory variables as the independent
variables. Auxiliary regressions are preferred to correlation matrix in detecting collinearity if
there are more than one explanatory variable in the regression model. Table 4.6 reports the
results of this estimation. The value of R
2
obtained is quite low at 0.29 implying a low
probability of multicollinearity. All variables are insignificant with the exception of AFR.

47

Table 4.6: Auxiliary Regression (Dependent Variable: Gini Index)

Constant term (C)

51.93 (8.98)***

1
) -0.18 (1.56)
1
) -0.69 (0.63)
1
) -0.05 (0.13)
African dummy variable (AFR) 10.89 (3.71)***

Observations 88
R-squared 0.29

The significance of AFR at the 1% level in the auxiliary regression yields an interesting
observation. One plausible interpretation of this is that both GIN
1
and AFR are commonly
related to certain underlying factor(s) which could potentially obscure their respective
marginal effect on population health. For example, the extreme poverty and generally weak
economic conditions found in many sub-Saharan African countries tend to further aggravate
the existing level of income inequality especially if the quality of institutions is inadequate.
Therefore, it is quite possible to argue that the inclusion of AFR in the basic regression model
could alter the effect of GIN
2
on life expectancy (LFE
1
), infant mortality (IFM
1
) and under-5
mortality (UFM
1
). For this reason, equation (1) is estimated again for the three health
indicators without the presence of AFR.

4.5.2 Excluding the African Dummy Variable (AFR)
Table 4.7 reports the regression results for equation (1) without including the African
dummy variable (AFR). The model with life expectancy (LFE
1
) as the dependent variable
improved as shown inside the circled area with the Gini index (GIN
1
) having the correct
theoretical sign and being significant at the 10% level. In addition, both female education
and (EDU
1
1
) are now statistically significant at the 1% level.
48

Table 4.7: Regression Result of Equation (1) excluding the African Dummy Variable (AFR)
Dependent variable
Life expectancy (LFE
1
) Infant mortality (IFM
1
) Under-5 mortality (UFM
1
)

Constant term (C) 30.83 (4.60)*** 170.20 (16.70)*** 265.26 (26.07)***

1
)
2.61 (0.54)***
-6.49 (2.07)*** -7.11 (4.01)*
Gini index (GIN
1
) -0.08 (0.05)* -0.00 (0.15) 0.08 (0.26)
1
) 0.66 (0.24)*** -3.36 (0.95)*** -5.55 (1.69)***
1
) 0.18 (0.04)*** -0.73 (0.17)*** -1.49 (0.31)***

Observations 88 88 88
R-squared 0.79 0.79 0.76
49

However, the exclusion of AFR fails to improve the other two models. The infant mortality
model experienced little changes to its coefficients with the GIN
1
coefficient still displaying
the inaccurate sign. Even though the under-5 mortality model shows a correct sign for GIN
1
,
the variable is not significant and the statistical strength for its log of GDP per capita (GDP
1
)
variable has been reduced to the 10% level (highlighted in red).

Furthermore, the R
2
values for all three regressions have dropped substantially after being
estimated without the African dummy variable. The standardized beta coefficients (refer to
Table A1 in the Appendix) did not change considerably after excluding AFR and hence the
order of relative importance among the explanatory variables remains the same. At this
stage, it is fairly clear that the inclusion of GIN
1
in the infant and under-5 mortality models
will not be necessary. Nevertheless, the situation is uncertain for the life expectancy model
and therefore the following test is performed.

4.5.3 Functional Form Stability and Omitted Variables Test
For the purpose of deciding whether to retain or exclude the Gini index (GIN
1
) from the life
expectancy model, the Regression Specifications Error Test (RESET) shall be utilized. The
RESET test is designed to detect misspecification in a model through the inclusion of
polynomial terms in the regression (Hill et al., 2008). In the above case, three possible
regressions will be examined under this test. The first one includes the GIN
1
variable but
excludes the African dummy variable (as seen in Table 4.7), the second includes both (as
seen in Table 4.3) and the last includes the African dummy variable (AFR) but excludes the
GIN
1
variable.

Results show that the RESET test (with 1 and 2 fitted terms) rejects the null hypothesis of no
misspecification at the 1% level of significance for the first regression indicating there could
be a problem of omitted variables, inclusion of irrelevant variables or inappropriate
functional form. However, there is a failure to reject the null hypothesis in both the second
and third regressions. Two implications arise from these outcomes. First, the omitted
50

variables problem seems to be mitigated with the inclusion of AFR. Second, the GIN
1
variable
appears to be an irrelevant variable since the failure of the RESET test to reject the null
hypothesis in the third regression suggests that the model is well specified. At this stage, it is
unlikely that GIN
1
will be considered as one of the candidates for the always included
regressors in the extreme bounds analysis (EBA) of Chapter 5. Based on the results of various
diagnostic tests performed above, it is perhaps more sensible instead to test the robustness
of GIN
1
as a variable of interest using the EBA.

4.6 Summary
The basic health regression model is estimated using data collected from 95 developed and
developing countries. After observing some preliminary scatter plots, the chapter provides
regression estimates of the effect of several potential determinants of health outcomes in
order to identify which variables will be always included in the extreme bounds analysis
(EBA) of Chapter 5. These variables are the log of GDP per capita (GDP
1
), female education
(EDU
1
), access to safe water (WAT
1
) and the African dummy variable (AFR). The Gini index
(GIN
1
) variable will not be treated as an always included regressor for three main reasons.
First, the scatter plots reveal a low correlation between GIN
1
and the three health indicators
thus suggesting low explanatory power. Second, GIN
1
fails to achieve the desired theoretical
sign in most specifications and appears to be irrelevant under the RESET test. Third, the
standardized beta coefficients show GIN
1
as the weakest among all regressed independent
variables in terms of importance. By taking all of these into consideration, it is then probably
more meaningful to designate GIN
1
as one of the variables of interest instead of the always
included regressors in the EBA.

51

Chapter 5: A Sensitivity Analysis
In this chapter, a sensitivity test of the potential health determinants will be performed by
using the extreme bounds analysis (EBA) method. The chapter begins with a background of
the EBA methodology and its application in the economic literature. Then, a detailed
explanation is given on the procedures of EBA in the context of investigating population
health. Following that, the subsequent interpretation of EBA estimation results for each
health indicator are discussed. The chapter concludes with a summary of the robust
potential determinants of population health.

5.1 Background of the Extreme Bounds Analysis
Empirical conclusions are often subjected to issues of robustness. In a typical regression
framework, it relates to the statistical significance of a particular variable when there are
changes in the choice of information set. For example, x
1
may be a significant explanatory
variable in a hypothetical regression model that includes x
2
and

x
3
but becomes insignificant
when x
4
is included. If it is indeed the case, then one cannot have complete confidence in the
conclusion that x
1
is important even though it was significant before the inclusion of x
4
. This
leads to several questions. In view of the situation, how does one interpret the relationship
between x
1
and the dependent variable? What if there are other variables in addition to x
4
that warrant consideration? How does one choose which variables to include?

The problem is that in many cases, other than the key variables of interest, it is not clear
which variables should be included as controls in the model. More often than not,
researchers have to resort to arbitrary selection of variables based on their preconceived
notions and ideas. Since different researchers hold different views about what kind of
variables should be in a model, this convention of estimation may give rise to biased
conclusions. The researcher could be tempted to report only those specifications that deliver
the expected/desired results and omit the others. Moosa and Cardak (2006) remark that
there are economists who estimate 1000 regressions, only to discard 999 of them after
successfully finding a regression which they find most convenient to report. This practice is
52

often associated with data mining and it may cast doubts about the validity of the
empirical results obtained.

In relation to the above quandary, Leamer (1983) argues that there is a need for empirical
studies to supply evidence of stability in their conclusions. Reliable conclusions are more
likely to be achieved if they are insensitive towards changes in the set of variables and
observations used. He postulates that a variable is only considered robust if its statistical
significance is not conditional on the choice of information set. Consequently, the extreme
bounds analysis (EBA) as discussed in Leamer (1983, 1985) was developed to reduce the
effect of model uncertainty and to provide a rigorous methodology in which the robustness
of variables can be assessed. It is a useful procedure to report the sensitivity of estimated
results to specification changes (Moosa and Cardak, 2006).

The relationship between a given explanatory variable and a dependent variable is deemed
to be robust if it produces an estimated coefficient that remains statistically significant and
possesses the theoretically predicted sign when the set of explanatory variables in the
regression changes. Generally, the EBA is based on equation (2):

(2) = o +[
I + [
m
m +[
z
Z + u

The independent variables are grouped into three different classifications. I is a vector of
explanatory variables that are always included in the regression. These variables are called
free (or fixed) variables. Typically, theories and past empirical studies are used to identify
the variables that should be entered under this category. m denotes the variable of interest
for which its robustness is being tested. Z is a set or vector of other variables which are
potentially important in explaining the dependent variable.

The EBAs objective is to find the widest range of coefficient estimates on the variable of
interest (m) that standard hypothesis tests do not reject. This is done by varying the set of Z-
53

variables in Equation (2) to produce regressions that will yield different values of coefficient
estimates ([
m
) for the variable of interest (m). Each regression therefore contains the free
variables ( I ), the variable of interest ( m) and many combinations of Z-variables
21
.
Subsequently, from these regressions results, the procedure identifies the highest and
lowest values of [
m
that cannot be rejected at a particular significance level.

Accordingly, the upper extreme bound is defined as the maximum value of [
m
plus two of its
standard deviation ([
m
mux
+ 2o
m
mux
) while the lower extreme bound is the minimum value of
[
m
minus two of its standard deviation ([
m
mn
2o
m
mn
). The partial correlation between the
variable of interest (m) and the dependent variable can then be inferred from these
extreme bounds. If both bounds are of the same sign (indicating that the interval does not
contain the value of zero), the variable of interest (m) is then said to be robust. Otherwise,
the result will be considered as fragile. The extreme values of [
m
mux
and [
m
mn
serve to
describe the ambiguity of inferences about the coefficient [
m
which is caused by model
uncertainty (Leamer and Leonard, 1983). In other words, the EBA is designed to expose any
biased estimators resulting from the arbitrary selection or exclusion of explanatory variables
in a model.

5.2 Applications of the Extreme Bounds Analysis
Levine and Renelt (1992) applied the extreme bounds analysis (EBA) to their study of cross-
country growth regressions by investigating the sensitivity of potential growth determinants
to changes in the explanatory variables used in the equation. The initial GDP per capita, ratio
of investment to GDP, initial secondary school enrolment and population growth rate were
included as the free variables (I) in the study. Over 50 other variables, including the authors
own constructed policy indicators, were identified as the Z-variables. Although there were
many variables examined, they found few to be robustly correlated with growth under the
EBA. Admittedly, however, the possible implication of introducing this large number of

21
The variables in this group are non-exhaustive and may even run up to 50 variables as in the case of growth
determinants. Therefore, based on the possible combinations of the Z-variables, the number of regressions
needed to perform the EBA could range from hundreds to millions.
54

regressors in an equation could lead to the problem of multicollinearity. This has an effect of
amplifying estimated coefficients and standard errors and hence affecting significance
results.

Nevertheless, Leamer (1978) reasons that multicollinearity is a manifestation of a weak data
problem rather than a procedural problem. If there is not enough independent variation in
an explanatory variable to explain the dependent variable, then the partial correlation
between the two in a cross-section regression is unlikely to be robust and therefore will be
reported as fragile by the EBA.

Similarly, Levine and Renelt (1992) believe that one should only place confidence in a
correlation if it remains significant after controlling for other relevant variables. In order to
mitigate the multicollinearity problem, their EBA is restricted in several ways. First, only a
maximum of three Z-variables are allowed in the analysis so that the total number of
explanatory variables in any one regression does not exceed eight. Second, to create a small
but reasonable conditioning set, the pool of variables from which the Z-variables are chosen
is limited to only seven variables. Third, for every variable of interest (m), the pool of
variables is further reduced by removing variables that, a priori, may measure the same
aspect. Consequently, they argue that these steps would reduce multicollinearity and hence
making the results of their EBA more credible.

The extreme bounds analysis is criticized, however, for its rather restrictive criterion for a
variable to be robust. A variable is deemed to be robust only if all estimated [
m
are
statistically significant and the extreme bounds share the same sign. This implies that a
variable will be considered fragile by the EBA even if the coefficient sign differs in only one of
the many regressions estimated. Critics of the EBA tend to highlight this as the underlying
reason why it is most likely only a few (or no) variables will be robust under the procedure
(for example see McAleer et al., 1985). Sala-i-Martin (1997a) suggests that the test is too
strong for any variables to really pass it and argues that if a large enough number of
55

regressions are run, the researcher is bound to find at least one specification in which the
estimated coefficient becomes insignificant or changes sign. As a result, even genuine
explanatory variables can be ruled out by the EBA simply because of one unfavorable
regression.

There are several variants of the extreme bounds analysis that attempt to circumvent the
above problem by relaxing the robustness criteria used in Leamer (1985) and Levine and
Renelt (1992). One of them is by Sala-i-Martin (1997a, 1997b) who revisits the study of
growth determinants by adopting a more lenient version of the EBA in which the entire
distribution of the estimators [
m
is analyzed for the purpose of evaluating robustness. He
reasons that it is more practical to place a level of confidence on the variable of interest
rather than strictly designating it as robust or fragile. According to him, if at least 95
percent of the cumulative distribution (density) function for [
m
lies on either side of zero,
one should be able to interpret confidently that the variable is robust. Based on this
approach, more variables are found to be strongly related to growth in his study when
compared to the ones claimed in Levine and Renelts EBA.

Another earlier variant of the EBA is forwarded by Granger and Uhlig (1990) in a study of the
velocity of money. They propose a more reasonable test by seeking to eliminate
models/regressions that have poor goodness of fit (R
2
) from the calculation of the extreme
bounds. The models with low R
2
are considered irrelevant and therefore their removal
reduces the difference between the upper and lower extreme bound. The narrower bounds
would mean it is less likely that the two would be of different signs and thus improving the
chances of a variable being classified as robust. Other recent applications of EBA or its
variants include studies by Baxter and Kouparitsas (2005) and Nguyen (2007) on the
determinants of business cycle comovement and synchronization.

56

5.3 Extreme Bounds Analysis for Population Health
In this thesis, the extreme bounds analysis (EBA) is applied to a linear regression that is
developed to explain population health. The EBA regression framework for health
determinants takes the following form:

(S) E
= o
0
+ o
]
I
]
n
]=1
+ [m
+ y
]
Z
]
p
]=1
+ u

where E represents the type of health indicator (life expectancy, infant mortality or under-5
mortality), I is a vector of the free variables, as identified by past studies, that are always
included in the regression, m is the single variable of interest for which its robustness is
being tested, and Z is a vector of the potentially important explanatory variables for
population health.

The I-variables consist of four variables which are the log of gross domestic product per
capita (GDP
1
), female education (EDU
1
), access to safe water (WAT
1
) and the African dummy
variable (AFR). Most empirical studies investigating population health report these variables
in their regressions as potential health determinants or as control variables. On the other
hand, there are five variables considered as candidates for the Z-variables and they are
number of physicians (PHY
1
), the log of health expenditure per capita (EXP
1
), Gini index
(GIN
1
), urbanization (URB
1
) and governance quality (GOV
1
). As discussed in Chapter 4, these
five variables have been studied in the literature and were often noted for their important
association with population health although they do not always appear simultaneously in
any given health regression.

The EBA will test nine variables of interest (m). Out of these nine, four are drawn from the
set of I-variables and five from the set of Z-variables. In other words, all of the variables will
be tested under the procedure. In the case where the variable of interest (m) is also one of
the I-variables, this variable will simply be regarded as m and therefore the number of I-
57

variables will be reduced by one in the regression equation. For example, if the variable of
interest is GDP
1
, the I-variables are only EDU
1,
WAT
1
and AFR. Likewise, if the variable of
interest is EDU
1
, the I-variables will then be only GDP
1,
WAT
1
and AFR. In the case where the
variable of interest (m) is also one of the Z-variables, this variable will also simply be
regarded as m therefore limiting the maximum number of Z-variables possible in the
regression equation to four. For example, when the variable of interest is PHY
1
, the set of Z-
variables will only consist of EXP
1
, GIN
1
, URB
1
and GOV
1
22
. Figure 5.1 shows a schematic
representation of the EBA criterion for a robust or fragile variable.

The upper and lower extreme bounds will be calculated for all variables of interest by
estimating regressions with various combinations of the Z -variables. Similar to the
explanation provided in the preceding section, the upper extreme bound here is defined as
the highest value of [ plus two of its standard error ([
hgh
+ 2o
hgh
) while the lower
extreme bound is the lowest value of [ minus two of its standard error ([
Iow
2o
Iow
). The
highest and lowest [s are identified from the values of [ that cannot be rejected at the 5%
significance level. With five Z-variables, the total possible combinations will be 31 (=2
5

1) permutations. In effect, this means there are 31 different regressions for each variable of
interest (m). Following Levine and Renelt (1992), the thesis performs the EBA test for each
health indicator and below are the discussion of the obtained results.

5.3.1 EBA Results for Life Expectancy
Table 5.1 shows EBA results for the free variables (I-variables) as variables of interest when
the dependent variable is life expectancy (LFE
1
). The coefficient estimates for the log of GDP
per capita (GDP
1
) and female education (EDU
1
) are found to be positive and robust. The
positive relationship between life expectancy and the two variables is compatible with the
outcomes of other health regression studies and therefore is within expectations. However,
access to safe water (WAT
1
) is reported as fragile with different signs for its extreme bounds.

22
Levine and Renelt (1992) limit the number of Z-variables in their EBA regression model to three because of
the large pool of variables from which the procedure chooses the Z-variables. In contrast, the EBA in this thesis
has only five variables as the Z-variables and therefore considers every possible combination of them.
58

The variable of interest (m) is said to be ROBUST if both the upper and lower extreme bounds
a) have the same coefficient sign and
b) are significant at the 5% level.
The variable of interest (m) is said to be FRAGILE if the upper and lower extreme bounds
a) have different coefficient sign AND/OR
b) are not significant at the 5% level.
Figure 5.1: A Schematic Representation of the EBA Criterion for Robustness
59

Table 5.1: EBA Results for the Free (I) Variables (Dependent Variable: Life Expectancy, LFE1)
Variable of
interest
(m)
Estimated Coefficient
()
Countries R-squared Z-Variables
Extreme Bound
Value
Robust/Fragile
GDP per capita
(log) (GDP
1
)
High: 2.68 (0.41)*** 88 0.91 GIN
1

Upper: 3.50
Lower: 0.38
Robust Base: 2.65 (0.38)*** 95 0.91
Low: 1.74 (0.68)** 88 0.92 PHY
1
, GOV
1
, URB
1
EXP
1
, GIN
1

Female
education
(EDU
1
)
High: 0.44 (0.17)** 95 0.91 PHY
1
, URB
1

Upper: 0.79
Lower: 0.03
Robust Base: 0.40 (0.15)*** 95 0.91
Low: 0.36 (0.17)** 88 0.92 GOV
1
, URB
1
, EXP
1
, GIN
1

Access to safe
water
(WAT
1
)
High: 0.07 (0.04)* 88 0.91 GOV
1
, GIN
1

Upper: 0.14
Lower: -0.02
Fragile Base: 0.06 (0.04)* 95 0.91
Low: 0.05 (0.03) 95 0.91 GOV
1
, URB
1
, EXP
1

African dummy
variable
(AFR)
High: -10.38 (1.04)*** 95 0.91 GOV
1
, EXP
1

Upper: -8.29
Lower: -13.91
Robust Base: -10.54 (1.01)*** 95 0.91
Low: -11.34 (1.28)*** 88 0.92 PHY
1
, GOV
1
, URB
1
, GIN
1

The base [ is the estimated coefficient of the variable of interest (m) in a regression that only includes the free variables and no Z-variables.
The high [ is the estimated coefficient of the variable of interest (m) from the regression with the upper extreme bound value ([
hgh
+2o
hgh
).
The low [ is the estimated coefficient of the variable of interest (m) from the regression with the lower extreme bound value ([
Iow
2o
Iow
).
The Z-Variables are the other variables of interest in the regression that produce the extreme bounds. PHY is the number of physicians, GOV is the governance
quality, URB is urbanization, EXP is health expenditure per capita and GIN is the Gini index.
The robust/fragile column reports whether the variable of interest (m) is robust or fragile.
60

Table 5.2: EBA Results for the Z-variables (Dependent Variable: Life Expectancy, LFE
1
)
Variable of interest
(m)
()
Extreme Bound
Value
Robust/Fragile
Number of
physicians
(PHY
1
)
High: 0.08 (0.43) 88 0.91 GIN
1

Upper: 0.95
Lower: -1.21
Fragile
a
Base: -0.02 (0.39) 95 0.91
Low: -0.35 (0.43) 95 0.91 URB
1
, EXP
1

Governance quality
(GOV
1
)
High: 0.75 (0.73) 88 0.92 PHY
1
, URB
1
, GIN
1

Upper: 2.21
Lower: -1.28
Fragile Base: 0.20 (0.59) 95 0.91
Low: -0.07 (0.60) 95 0.91 EXP
1

Urbanization
(URB
1
)
High: 0.04 (0.02)* 95 0.91 PHY
1
, GOV
1

Upper: 0.09
Lower: -0.03
Fragile Base: 0.04 (0.02) 95 0.91
Low: 0.02 (0.03) 88 0.92 EXP
1
, GIN
1

Health expenditure
per capita (log)
(EXP
1
)
High: 0.69 (0.35)* 88 0.92 PHY
1
, URB
1
, GIN
1

Upper: 1.40
Lower: -0.22
Fragile Base: 0.60 (0.37) 95 0.91
Low: 0.54 (0.38) 95 0.91 GOV
1
, URB
1

Gini index
(GIN
1
)
High: 0.03 (0.04) 88 0.92 GOV
1
, EXP
1

Upper: 0.10
Lower: -0.07
Fragile
a
Base: 0.02 (0.03) 88 0.91
Low: 0.01 (0.04) 88 0.92 PHY
1
, URB
1

hgh
+2o
hgh
).
Iow
2o
Iow
).
a
The variable of interest (m)entered the base regression with the incorrect sign.
61

There are two possible explanations for the non-robustness of WAT
1
. First, the variable in
the regression equation could be collinear to another explanatory variable in the model thus
making its respective partial correlation to life expectancy difficult to isolate. Second, there
is not enough independent variation in the variable to explain life expectancy in an equation
that includes GDP per capita and female education. On the other hand, the coefficient
estimate of the African dummy variable (AFR) is robust in various specifications and
possesses a strong negative relationship with life expectancy.

Table 5.2 shows the EBA results for the Z-variables. None of them appear to be robust. As a
matter of fact, several coefficient estimates displayed the incorrect sign upon entering the
base regression and others are reported as insignificant. In particular, urbanization (URB
1
)
seems to have little effect on life expectancy based on its relatively lower coefficient
estimate in many specifications. Additionally, the number of physicians (PHY
1
) and the Gini
index (GIN
1
) failed to produce the correct coefficient sign in their respective base regressions.

5.3.2 EBA Results for Infant Mortality
Table 5.3 presents the EBA results for the free variables (I-variables) when the dependent
variable is infant mortality (IFM
1
). The coefficient estimate for the log of GDP per capita
(GDP
1
) is reported as fragile and the variable does not appear to have a robust partial
correlation with infant mortality. This is because the upper extreme bound and the lower
extreme bound do not share the same sign which in turn implies that the interval between
these two bounds may contain the value of zero. A value of zero in this context will denote
the absence of a relationship between GDP
1
and infant mortality. It must be noted, however,
that the relationship is highly significant at the 1% level and both extreme bounds are of the
same sign in the base regression when there are no Z-variables present.

Unlike in the case of life expectancy (LFE
1
), infant mortality shares a robust relationship with
both female education (EDU
1
1
). EDU
1
and WAT
1
are
consistently significant in all 31 regressions at the 1% level. The strong association gives
62

Table 5.3: EBA Results for the Free (I) Variables (Dependent Variable: Infant Mortality, IFM1)
Variable of
interest
(m)
()
Extreme Bound
Value
Robust/Fragile
GDP per capita
(log) (GDP
1
)
High: -3.73 (2.90) 88 0.88 GOV
1
, EXP
1
, GIN
1

Upper: 2.07
Lower: -11.87
Fragile Base: -6.83 (1.56)*** 95 0.88
Low: -5.85 (3.01)* 95 0.88 GOV
1
, URB
1
, EXP
1

Female
education
(EDU
1
)
High: -2.37 (0.76)*** 95 0.88 GOV
1
, URB
1
, EXP
1

Upper: -0.84
Lower: -4.41
Robust Base: -2.53 (0.74)*** 95 0.88
Low: -2.84 (0.78)*** 95 0.88 PHY
1

Access to safe
water
(WAT
1
)
High: -0.37 (0.13)*** 95 0.89 EXP
1

Upper: -0.10
Lower: -0.70
Robust Base: -0.37 (0.13)*** 95 0.88
Low: -0.43 (0.13)*** 88 0.89 PHY
1
, GOV
1
, URB
1
, GIN
1

African dummy
variable
(AFR)
High: 34.07 (4.52)*** 88 0.88 PHY
1
, GOV
1
, GIN
1

Upper: 43.10
Lower: 20.24
Robust Base: 28.57 (4.09)*** 95 0.88
Low: 28.20 (3.98)*** 95 0.89 URB
1
, EXP
1

hgh
+2o
hgh
).
Iow
2o
Iow
).

63

Table 5.4: EBA Results for the Z-variables (Dependent Variable Infant Mortality, IFM
1
)
(m)
()
Extreme Bound
Value
Robust/Fragile
Number of
physicians
(PHY
1
)
High: 2.86 (1.79) 95 0.88 GOV
1
, EXP
1

Upper: 6.44
Lower: -3.94
Fragile
a
Base: 2.24 (1.64) 95 0.88
Low: -0.67 (1.64) 88 0.88 URB
1
, GIN
1

Governance quality
(GOV
1
)
High: -2.42 (2.59) 95 0.88 URB
1
, EXP
1

Upper: 2.76
Lower: -11.32
Fragile Base: -3.09 (2.53) 95 0.88
Low: -5.28 (3.02)* 88 0.88 PHY
1
, GIN
1

Urbanization
(URB
1
)
High: 0.11 (0.11) 88 0.88 PHY
1
, EXP
1
, GIN
1

Upper: 0.33
Lower: -0.17
Fragile
a
Base: 0.08 (0.10) 95 0.88
Low: 0.03 (0.10) 95 0.88 PHY
1
, GOV
1

Health expenditure
per capita
(EXP
1
)
High: -0.53 (3.05) 95 0.88 GOV
1

Upper: 5.57
Lower: -7.48
Fragile Base: -1.25 (3.08) 95 0.88
Low: -1.97 (2.76) 88 0.88 URB
1
, GIN
1

Gini index
(GIN
1
)
High: -0.29 (0.14)** 88 0.88 PHY
1

Upper: -0.01
Lower: -0.71
Robust
a
Base: -0.30 (0.13)** 88 0.88
Low: -0.39 (0.16)** 88 0.89 PHY
1
, GOV
1
, URB
1
, EXP
1
hgh
+2o
hgh
).
Iow
2o
Iow
).
a
64

support to the empirical evidence found in the literature regarding the importance of
maternal education and the availability of water and nutrition to growing infants. Not
surprisingly, the African dummy variable (AFR) is also robust under the EBA test and adds
further evidence of the continents distinct and poor state of population health. On average,
over 80% of the cross-section variation in infant mortality is explained by the free variables.

Table 5.4 reports the EBA results for the Z-variables. All of the variables except the Gini
index (GIN
1
) are fragile. The coefficient estimates for both number of physicians (PHY
1
) and
urbanization (URB
1
) possess the incorrect sign in their respective base regressions. The non-
robustness of URB
1
and PHY
1
are plausibly related to their effect already being captured by
the variable GDP per capita. This is because it is arguable that countries with higher income
per capita tend to have more urbanized areas and a higher number of medical practitioners.
An interesting observation is the robustness of the variable GIN
1
. This evidence gives support
to the notion of a positive relationship between income inequality and population health as
discussed previously in section 4.4.

5.3.3 EBA Results for Under-5 Mortality
Table 5.5 shows the EBA results for the free variables (I-variables) when the dependent
variable is under-5 mortality (UFM
1
). Almost 90% of the cross-section variation in under-5
mortality is explained by the free variables. All but the log of GDP per capita (GDP
1
) report a
robust partial correlation with the health indicator. Neither the upper nor lower extreme
bound value for GDP
1
are statistically significant at the 5% level and in addition they have
different sign thus rendering the variables relationship with under-5 mortality fragile.

1
1
) are both significant at the 1% level
in all 31 regressions estimated and their extreme bounds possess the same sign hence
making them robust under the EBA. This observation again confirms that EDU
1
and WAT
1
are
strongly associated with the health conditions of infants and young children and implies the
important role played by mothers in the development of their offspring. On the other hand,
65

Table 5.5: EBA Results for the Free (I) Variables (Dependent Variable: Under-5 Mortality, UFM1)
Variable of
interest
(m)
()
Extreme Bound
Value
Robust/Fragile
GDP per capita
(log) (GDP
1
)
High: -5.67 (4.45) 88 0.89 GOV
1
, EXP
1
, GIN
1

Upper: 3.24
Lower: -17.58
Fragile Base: -7.35 (2.51)*** 95 0.88
Low: -8.42 (4.58)* 88 0.89 GOV
1
, URB
1
, EXP
1

Female
education
(EDU
1
)
High: -4.05 (1.02)*** 88 0.89 GOV
1
, EXP
1
, GIN
1

Upper: -2.01
Lower: -7.42
Robust Base: -4.17 (1.02)*** 95 0.88
Low: -5.06 (1.18)*** 95 0.89 PHY
1
, GOV
1

Access to safe
water
(WAT
1
)
High: -0.80 (0.25)*** 95 0.88 GOV
1
, EXP
1

Upper: -0.29
Lower: -1.34
Robust Base: -0.80 (0.25)*** 95 0.88
Low: -0.87 (0.24)*** 88 0.89 GOV
1
, URB
1
, GIN
1

African dummy
variable
(AFR)
High: 64.45 (7.86)*** 88 0.89 PHY
1
, GOV
1
, GIN
1

Upper: 80.17
Lower: 40.10
Robust Base: 55.01 (6.98)*** 95 0.88
Low: 53.93 (6.91)*** 95 0.88 GOV
1
, URB
1
, EXP
1

hgh
+2o
hgh
).
Iow
2o
Iow
).
66

Table 5.6: EBA Results for the Z-variables (Dependent Variable Under-5 Mortality, UFM
1
)
(m)
()
Extreme Bound
Value
Robust/Fragile
Number of
physicians
(PHY
1
)
High: 3.40 (2.91) 88 0.89 GOV
1
, EXP
1
, GIN
1

Upper: 9.22
Lower: -3.48
Fragile
a
Base: 6.46 (2.61)** 95 0.89
Low: 2.46 (2.97) 88 0.89 URB
1
, GIN
1

Governance quality
(GOV
1
)
High: 2.60 (4.29) 95 0.88 URB
1
, EXP
1

Upper: 11.17
Lower: -12.50
Fragile
a
Base: 1.06 (4.05) 95 0.88
Low: -2.33 (5.08) 88 0.89 PHY
1
, GIN
1

Urbanization
(URB
1
)
High: 0.14 (0.15) 95 0.88 GOV
1
, EXP
1

Upper: 0.45
Lower: -0.25
Fragile
a
Base: 0.12 (0.15) 95 0.88
Low: 0.04 (0.15) 95 0.89 PHY
1
, EXP
1

Health expenditure
per capita
(EXP
1
)
High: -1.13 (4.00) 95 0.88 URB
1

Upper: 6.87
Lower: -12.65
Fragile Base: -1.08 (4.07) 95 0.90
Low: -2.79 (4.93) 95 0.89 PHY
1
, GOV
1

Gini index
(GIN
1
)
High: -0.43 (0.24)* 88 0.89 PHY
1

Upper: 0.05
Lower: -1.09
Fragile
a
Base: -0.50 (0.22)** 88 0.89
Low: -0.49 (0.30) 88 0.89 PHY
1
GOV
1
, URB
1
, EXP
1

hgh
+2o
hgh
).
Iow
2o
Iow
).
a

67

the partial correlation between under-5 mortality and the African dummy variable (AFR)
is robust as evident by the significance of the latter in all specifications.

Table 5.6 presents the EBA results for the Z-variables. Since infant mortality and under-5
mortality are closely linked in terms of the health aspect they measure, most of their EBA
results are identical. Not surprisingly, none of the variables of interest recorded a robust
partial correlation with under-5 mortality. The fragility of these relationships is even
more striking when one considers that four out of the five Z-variables failed to produce
the theoretically predicted sign in their respective base regressions.

On average, the R-squared value remains approximately the same before and after
including the Z-variables. The inclusion of the variables number of physicians (PHY
1
),
governance quality (GOV
1
1
), health expenditure per capita (EXP
1
),
and Gini index (GIN
1
) did not add any significant explanatory power to the model.

5.4 A Reasonable Extreme Bounds Analysis
It has been debated in the literature that the extreme bounds analysis (EBA) proposed by
Leamer (1983, 1985) and Levine and Renelt (1992) uses very restrictive criterion to label
a variable robust. Granger and Uhlig (1990) suggest a more reasonable variant of the EBA
by relaxing the criterion through the elimination of models with poor goodness of fit as
measured by the R
2
. Consequently, these models will be irrelevant and excluded from the
calculations of the upper and lower extreme bounds. The condition for a model under
this procedure to be included in the EBA calculation is presented in equation (4)

(4) R
0
2
|(1 0)R
mux
2
+ 0R
mn
2
]

where 0 < 0 < 1, such that if 0=0 then the extreme bounds will be derived from the
model with the highest value of R
2
(R
mux
2
) and if 0=1 then the extreme bounds will be
determined from all models including the one with the lowest value of R
2
(R
mn
2
).
Effectively, any other value of 0 denotes that the extreme bounds are calculated from
the models with R
2
in the top 0 percent of the (R
mux
2
0R
mn
2
) range.
68

Since the EBA results have not been encouraging so far, the thesis performs the
reasonable extreme bounds analysis (REBA) on equation (3) for all three health indicators
to examine whether the non-robustness of the Z-variables are due to the stringent
criterion used in the original EBA. Different arbitrary values of 0 are used to identify
models with R
2
in the top 75, 50, 10 and 5 percent of the (R
mux
2
0R
mn
2
) range.
Accordingly, in the context of this investigation, 0 takes the value of 0.75, 0.5, 0.1 and
0.05. In addition, the estimation where 0 equals to zero is also included to examine the
robustness of the variable of interest (m) based on the model with the highest R
2
.

The REBA test reports no changes in the original results obtained earlier (refer to Table
B1 to B3 in the Appendix). Table 5.7 presents a summary of both the original EBA and
REBA results.

Table 5.7: Summary of the Original EBA and REBA Results
(m)
Dependent variable
Life expectancy
(LFE
1
)
Infant mortality
(IFM
1
)
Under-5 mortality
(UFM
1
)
Original
EBA
REBA
Original
EBA
REBA
Original
EBA
REBA
GDP per capita
(GDP
1
)
Robust Robust Fragile Fragile Fragile Fragile
Female education
(EDU
1
)
Robust Robust Robust Robust Robust Robust
Access to safe water
(WAT
1
)
Fragile Fragile Robust Robust Robust Robust
African dummy variable
(AFR)
Robust Robust Robust Robust Robust Robust
Number of physicians
(PHY
1
)
Fragile Fragile Fragile Fragile Fragile Fragile
Governance quality
(GOV
1
)
Urbanization
(URB
1
)
69

Health expenditure per
capita (EXP
1
)
Gini index
(GIN
1
)
Fragile Fragile Robust Robust Fragile Fragile

5.5 A Further Sensitivity Test
In addition to the above, a test is also performed using the lag interval data previously
discussed in section 4.3. Generally, this data represents the past values of the potential
population health determinants. Equation (3) is estimated again for each (current value)
health indicator by using past values of the explanatory variables as regressors. For
instance, the EBA test for life expectancy (LFE
1
) is repeated but now with GDP
0
, EDU
0
and
other lag variables on the right hand side of the equation. The objective of this exercise is
to investigate the robustness of the statistical relationship between a lag potential
determinant and population health.

Several explanatory variables, however, have been excluded from the equation due to
unavailability of data. They are access to safe water and health expenditure per capita.
The exclusion of these two variables means they are no longer examinable as variable of
interest. Although there are no past data available for governance quality, it is still
included in the equation as a lag variable because it can be argued that the quality of
institutions pertaining to governance is most likely to be relatively stable over time in the
sample period of 48 years (1960 to 2008).

In this scenario, the I-variables are GDP per capita (GDP
0
), female education (EDU
0
) and
the African dummy variable (AFR) while the Z-variables are the number of physicians
(PHY
0
), governance quality (GOV
1
0
) and Gini index (GIN
0
). In order to
economize space, the full EBA results is not shown here (refer to Tables C1 to C3 in the
Appendix for complete results). A summary of the robustness of potential population
health determinants across the three health indicators is presented in Table 5.8. In the
life expectancy and infant mortality models, all of the variables of interest are not robust
except AFR and GOV
1
. Likewise, there are no robust variables in the under-5 mortality
70

model except AFR. This rather negative result seems to suggest that the associative
relationship between a lag potential determinant and population health is largely fragile.

Table 5.8: Summary of EBA Results for the Lag Variables of Interest
Dependent variable
Variable of interest (m)
Life expectancy
(LFE
1
)
Infant mortality
(IFM
1
)
Under-5 mortality
(UFM
1
)
0
) Fragile Fragile Fragile
0
) Fragile Fragile Fragile
African dummy variable (AFR) Robust Robust Robust
Number of physicians (PHY
0
) Fragile
a
Fragile
a
Fragile
a

Governance quality (GOV
1
) Robust Robust Fragile
Urbanization (URB
0
) Fragile Fragile
a
Fragile
a

Gini index (GIN
0
) Fragile
a
Fragile
a
Fragile
a

a
The variable of interest (m) entered the base regression with the incorrect sign.

5.6 Summary
The extreme bounds analysis (EBA) has been developed as a procedure to examine the
sensitivity of empirical conclusions to changes in the model specification. EBA functions
by testing the statistical significance of the variable of interest in regressions with
different combinations of explanatory variables. Even though the procedure is often
criticized for its stringent results and biased estimations due to multicollinearity, there
were attempts made to reduce these problems by relaxing the criterion required to
classify a partial correlation between the dependent variable and the variable of interest
as robust.

Accordingly, the EBA test was then performed on the basic health regression model for
three different health indicators. Only the log of GDP per capita and the African dummy
variable are robust with respect to their partial correlation with life expectancy. On the
other hand, the EBA test for both infant mortality and under-5 mortality returned fairly
similar results with only female education, access to safe water and the African dummy
71

variable being robust. The variable Gini index (representing income inequality) is found to
be robust only when the dependent variable is infant mortality.

The test criterion is further relaxed with the application of the reasonable extreme
bounds analysis (REBA) but the main conclusion remains unchanged. In addition, the EBA
test for the lag variables of interest reported mostly fragile results. The overall
implication of these tests seem to suggest that life expectancy, infant mortality and
under-5 mortality are explained by a very small set of key variables such as income per
capita, female education, access to safe water and the African dummy variable. However,
it must be stressed again that the overall objective here is to evaluate the statistical
significance of potential population health determinants across different specifications.
The EBA carried out above is a test for robustness and does not seek to establish
evidence of causal effects.
72

Chapter 6: Conclusion
The thesis attempts to examine the robustness of findings regarding population health
determinants in the literature. The theoretical literature reveals three main themes in
population health which are namely nutrition, income and inequality. Nutrition and food
supply played an important part in improving life expectancy during the nineteenth
century by increasing the nutritional intake of households and reducing hunger and
susceptibility to diseases. Of particular interest is the relationship between income and
nutrition as explained in the nutritional/efficiency wage model. The role of income then
became more prominent in the twentieth century and is explored in many studies
including the seminal work of Preston (1975) who reports the cross-country positive
relationship between life expectancy and income per capita and subsequently
popularized the income hypothesis. Contemporary health studies introduce the issue of
income inequality in the determination of health and argue that a less egalitarian society
is more likely to have poor population health. Nevertheless, this argument has also
drawn many criticisms as evident in several studies disapproving the relationship
between income inequality and several health outcomes.

The empirical literature provides further evidence of population health determinants.
Fairly popular determinants such as income per capita, female education and access to
safe water have often been cited in health regression studies as explanatory variables or
control variables. Most of the variables related to population health can be grouped into
areas of economic development, human capital, health resources and governance.
Economic development variables such as income per capita and income inequality are
found to be significantly related to various population health measures in quite a number
of studies. In addition, human capital in the form of education is also positively
correlated with population health. Female education, in particular, is claimed to have a
strong effect in lowering mortality rates of infants and children. Advocates of the
education hypothesis further suggest that education has a positive effect on health which
is independent of income.

73

Health resources variables yield potential health determinants in access to safe water,
the number of physicians and health expenditure. The availability of health-related
personnel such as doctors, nurses and midwives enables households to receive prompt
and proper health care and treatment. Access to safe water or clean water supply is
necessary to reduce the virulence of diseases by improving sanitation processes while
health expenditure seeks to make health care services more accessible to the public.
Additionally, the quality of governance as a potential population health determinant is
proposed in several studies investigating the relationship between democracy and health.
They argue that elements of bureaucracy and corruption in less democratic countries
tend to hinder the provision of public goods such as health care and this in turn will have
a detrimental effect on population health.

In view of the many existing variables claiming to be population health determinants,
there exists a need to examine their robustness across different model specifications.
Robustness is important because it determines the reliability of empirical results
obtained. The scarcity of rigorous sensitivity analyses in the empirical health literature
provides further motivation for this research. The thesis employs an empirical technique
called the extreme bounds analysis (EBA) to examine whether these variables are
statistically robust. Life expectancy, infant mortality and under-5 mortality are used to
represent population health in a basic health regression model. Preliminary estimations
report a good fit between the data and the basic model using the explanatory variables
income per capita, female education, access to safe water and the African dummy
variable. Further diagnostic tests confirm that these variables should be included in the
EBA as the always included or free variables.

The extreme bounds analysis reveals very few robust or consistently significant
variables that are associated with population health. For example, only income per capita
and the African dummy variable are classified as robust under the EBA in a model where
the dependent variable is life expectancy. Likewise, in the infant mortality and under-5
mortality models, only female education, access to safe water and the African dummy
variable are robust while the rest of the explanatory variables are reported fragile. One
interesting exception is the Gini index (a proxy for income inequality) which is robust only
74

when the dependent variable is infant mortality. This research provided further
evidential support for the findings of other studies that claim these robust variables as
population health determinants.

In hindsight, however, one should not completely dismiss the importance of the fragile
variables reported by the EBA. The EBA is not a test of causality but rather a test of
robustness. A variable may still be a causal factor even though it is reported fragile under
the procedure. Nevertheless, the overall implication that can be gathered from this
research is that population health can be explained by a small set of key variables. In
addition, the significance of the African dummy variable implies that further efforts
should be made to assist sub-Saharan African countries to improve their population
health. Further research is possible in exploring the issue of causality and establishing
evidence of causal effects for the variables discussed above.

While it is acknowledged that the extreme bounds analysis used in this thesis has some
shortcomings, it remains a relatively good procedure to use in the context of population
health because it eliminates the need for arbitrary selection of results to report.
Essentially, the results presented here are impartial and are not dependent upon the
empirical outcomes obtained regardless whether they are favourable or not. In a way,
the EBA encourages the adoption of an unbiased approach towards investigating
population health determinants that are relevant in the literature. Therefore, this
research should be considered as a complement to other health determinant studies
which are often preconceived and ideologically driven.

75

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81

Appendix

List of Countries
Albania
Algeria
Argentina
Australia
Austria
Bangladesh
Belize
Benin
Bolivia
Botswana
Brazil
Bulgaria
Burundi
Cameroon
Canada
Central African Republic
Chile
China
Colombia
Congo, Democratic
Republic
Congo, Republic
Costa Rica
Cote dIvoire
Denmark
Dominican Republic
Ecuador
Egypt, Arab Republic
El Salvador
Estonia
Finland
Gabon
Gambia, The
Germany
Ghana
Greece
Guatemala
Guyana
Honduras
Hungary
India
Indonesia
Iran, Islamic Republic
Jamaica
Japan
Jordan
Kenya
Lao PDR
Latvia
Lesotho
Liberia
Malawi
Malaysia
Mali
Mauritania
Mexico
Mongolia
Morocco
Mozambique
Namibia
Nepal
Netherlands
Nicaragua
Niger
Pakistan
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Portugal
Romania
Rwanda
Senegal
Sierra Leone
Singapore
Slovak Republic
South Africa
Spain
Sri Lanka
Swaziland
Sweden
Switzerland
Tajikistan
Thailand
Togo
Trinidad and Tobago
Tunisia
Turkey
Uganda
United States
Uruguay
Venezuela, RB
Vietnam
Zambia
Zimbabwe

82

Table A1: Standardized Beta Coefficients (without AFR)

Dependent variable

Life expectancy
(LFE
1
)
Infant mortality
(IFM
1
)
Under-5 mortality
(UFM
1
)
1
) 0.39 -0.29 -0.19
Gini index (GIN
1
) -0.11 -0.00 0.02
1
) 0.20 -0.31 -0.30
1
) 0.31 -0.37 -0.45

83

1
)

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
Upper extreme bound ([
hgh
+2o
hgh
) 3.50 3.50 3.04 3.10 3.10
Lower extreme bound ([
Iow
2o
Iow
) 0.38 0.38 0.38 0.38 0.38
Robust/Fragile Robust Robust Robust Robust Robust

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.79 0.77 0.76 0.75 0.75
Iow
2o
Iow
) 0.03 0.03 0.03 0.03 0.03

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.14 0.14 0.13 0.13 0.13
Iow
2o
Iow
) -0.02 -0.02 -0.01 -0.01 -0.01
Robust/Fragile Fragile Fragile Fragile Fragile Fragile

African dummy variable (AFR) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) -8.47 -8.52 -8.49 -8.55 -8.58
Iow
2o
Iow
) -13.91 -13.91 -13.80 -13.80 -13.80

84

1
) (continued)

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.95 0.95 0.74 0.73 0.73
Iow
2o
Iow
) -1.22 -1.22 -1.18 -1.18 -1.18

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 2.21 2.21 2.00 2.00 2.00
Iow
2o
Iow
) -1.08 -1.09 -1.01 -1.01 -0.99

Urbanization (URB
1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.09 0.09 0.08 0.08 0.08
Iow
2o
Iow
) -0.03 -0.03 -0.03 -0.03 -0.02

Health expenditure per capita (log)
(EXP
1
)
0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 1.40 1.40 1.40 1.32 1.32
Iow
2o
Iow
) -0.22 -0.13 -0.13 -0.13 -0.13

Gini index (GIN
1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.10 0.10 0.10 0.10 0.10
Iow
2o
Iow
) -0.07 -0.06 -0.06 -0.06 -0.06

85

1
)

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 2.07 2.07 1.60 1.60 1.70
Iow
2o
Iow
) -11.87 -10.83 -10.73 -10.73 -10.73

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) -0.84 -0.99 -0.87 -0.87 -0.87
Iow
2o
Iow
) -4.37 -4.30 -3.95 -3.95 -4.04

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) -0.12 -0.12 -0.16 -0.16 -0.16
Iow
2o
Iow
) -0.70 -0.70 -0.70 -0.70 -0.70

hgh
+2o
hgh
) 43.10 43.10 42.66 42.66 42.33
Iow
2o
Iow
) 21.01 22.31 25.02 25.02 25.02

86

1
) (continued)

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 6.44 3.88 3.24 3.24 3.24
Iow
2o
Iow
) -3.94 -3.87 -3.57 -3.57 -3.59

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 1.64 1.28 1.28 1.28 1.28
Iow
2o
Iow
) -11.32 -11.32 -11.08 -11.08 -10.34

Urbanization (URB
1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.33 0.33 0.30 0.30 0.30
Iow
2o
Iow
) -0.17 -0.13 -0.13 -0.13 -0.13

(EXP
1
)
0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 4.52 4.52 4.31 4.31 4.31
Iow
2o
Iow
) -7.48 -7.48 -6.32 -6.32 -6.37

Gini index (GIN
1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) -0.04 -0.04 -0.07 -0.07 -0.06
Iow
2o
Iow
) -0.71 -0.71 -0.71 -0.71 -0.71

87

1
)

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 3.24 3.24 3.15 3.15 2.98
Iow
2o
Iow
) -14.88 -14.88 -14.88 -15.12 -16.27

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) -2.01 -2.01 -2.03 -2.02 -2.02
Iow
2o
Iow
) -7.41 -7.41 -6.92 -6.93 -6.87

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) -0.33 -0.33 -0.35 -0.36 -0.38
Iow
2o
Iow
) -1.34 -1.34 -1.34 -1.34 -1.34

hgh
+2o
hgh
) 80.17 80.17 80.17 79.62 79.24
Iow
2o
Iow
) 44.56 44.56 47.75 48.42 48.30

88

1
)
(continued)

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 9.23 9.23 8.76 8.76 8.76
Iow
2o
Iow
) -3.48 -3.48 -3.33 -3.33 -3.20

1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 8.07 8.07 9.28 8.48 8.48
Iow
2o
Iow
) -12.50 -12.50 -12.50 -11.01 -10.78

Urbanization (URB
1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.46 0.46 0.43 0.43 0.43
Iow
2o
Iow
) -0.25 -0.25 -0.26 -0.25 -0.25

(EXP
1
)
0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 5.77 5.77 5.39 6.08 5.78
Iow
2o
Iow
) -12.65 -12.65 -10.67 -10.67 -10.03

Gini index (GIN
1
) 0 = 0.75 0 = 0.50 0 = 0.10 0 = 0.05 0 = 0.00
hgh
+2o
hgh
) 0.05 0.05 0.11 0.08 0.11
Iow
2o
Iow
) -1.09 -1.09 -1.04 -1.09 -1.09

89

Table C1: EBA Results for the Lag Variables of Interest (Dependent Variable: Life Expectancy, LFE
1
)
(m)
()
Extreme Bound
Value
Robust/Fragile
GDP per capita
(log) (GDP
0
)
High: 1.69 (0.43)* 35 0.91 PHY
0
, GIN
0
, GOV
1

Upper: 3.61
Lower: -0.56
Fragile Base: 3.03 (0.42)*** 95 0.88
Low: 1.55 (1.06) 35 0.90 PHY
0
, URB
0
, GIN
0
, GOV
1

Female education
(EDU
0
)
High: 0.39 (0.33) 35 0.87 PHY
0
, URB
0
, GIN
0

Upper: 1.05
Lower: -0.30
Fragile Base: 0.42 (0.19)** 95 0.88
Low: 0.10 (0.20) 39 0.90 URB
0
, GIN
0
, GOV
1

African dummy
variable
(AFR)
High: -8.19 (2.11)*** 35 0.90 PHY
0
, URB
0
, GIN
0
, GOV
1

Upper: -3.97
Lower: -15.23
Robust Base: -12.73 (1.01)*** 95 0.88
Low: -13.11 (1.06)*** 89 0.89 PHY
0
, GOV
1

Number of
physicians
(PHY
0
)
High: -0.01 (1.10) 35 0.87 URB
0
, GIN
0

Upper: 2.18
Lower: -2.98
Fragile
a
Base: -0.76 (0.33)** 95 0.88
Low: -1.21 (0.89) 35 0.90 GIN
0
, GOV
1

Governance quality
(GOV
1
)
High: 2.94 (0.99)*** 35 0.90 PHY
0
, GIN
0

Upper: 4.91
Lower: 0.58
Robust Base: 1.72 (0.56)*** 95 0.88
Low: 1.71 (0.56)*** 89 0.89 PHY
0
, URB
0

hgh
+2o
hgh
).
Iow
2o
Iow
).
a
90

Table C1: EBA Results for the Lag Variables of Interest (Dependent Variable: Life Expectancy, LFE
1
) (continued)
(m)
()
Extreme Bound
Value
Robust/Fragile
Urbanization
(URB
0
)
High: 0.05 (0.03)* 89 0.89 PHY
0

Upper: 0.12
Lower: -0.06
Fragile Base: 0.04 (0.03) 95 0.88
Low: 0.01 (0.03) 39 0.87 GIN
0

Gini index
(GIN
0
)
High: 0.09 (0.07) 35 0.90 PHY
0
, GOV
1

Upper: 0.23
Lower: -0.15
Fragile
a
Base: 0.04 (0.06) 95 0.88
Low: 0.01 (0.07) 35 0.87 PHY
0
, URB
0

hgh
+2o
hgh
).
Iow
2o
Iow
).
a

91

Table C2: EBA Results for the Lag Variables of Interest (Dependent Variable: Infant Mortality, IFM
1
)
(m)
()
Extreme Bound
Value
Robust/Fragile
GDP per capita
(log) (GDP
0
)
High: -2.83 (4.48) 35 0.84 PHY
0
, URB
0
, GIN
0
, GOV
1

Upper: 6.13
Lower: -10.99
Fragile Base: -8.87 (1.88)*** 95 0.88
Low: -4.04 (3.47) 39 0.85 GIN
0
, GOV
1

Female education
(EDU
0
)
High: -0.32 (0.93) 35 0.84 PHY
0
, GIN
0
, GOV
1

Upper: 1.53
Lower: -3.43
Fragile Base: -2.35 (0.81)*** 95 0.88
Low: -1.53 (0.95) 89 0.83 PHY
0
, GOV
1

African dummy
variable
(AFR)
High: 50.28 (12.22)*** 35 0.79 PHY
0
, GIN
0

Upper: 74.73
Lower: 12.85
Robust Base: 39.78 (4.91)*** 95 0.88
Low: 36.45 (11.80)*** 35 0.84 PHY
0
, URB
0
, GIN
0
, GOV
1

Number of
physicians
(PHY
0
)
High: 3.14 (5.96) 35 0.79 URB
0
, GIN
0

Upper: 15.06
Lower: -10.38
Fragile
a
Base: 1.64 (1.93) 95 0.88
Low: -2.53 (3.93) 35 0.84 GIN
0
, GOV
1

Governance quality
(GOV
1
)
High: -10.32 (3.58)*** 95 0.83 URB
0

Upper: -3.15
Lower: -25.06
Robust Base: -10.30 (3.56)*** 95 0.88
Low: -14.61 (5.22)*** 35 0.84 PHY
0
, GIN
0

hgh
+2o
hgh
).
Iow
2o
Iow
).
a
92

Table C2: EBA Results for the Lag Variables of Interest (Dependent Variable: Infant Mortality, IFM
1
) (continued)
(m)
()
Extreme Bound
Value
Robust/Fragile
Urbanization
(URB
0
)
High: 0.06 (0.12) 95 0.83 GOV
1

Upper: 0.30
Lower: -0.38
Fragile
a
Base: 0.05 (0.15) 95 0.88
Low: -0.08 (0.15) 35 0.79 PHY
0
, GIN
0

Gini index
(GIN
0
)
High: -0.27 (0.32) 35 0.79 PHY
0
, URB
0

Upper: 0.38
Lower: -0.87
Fragile
a
Base: -0.30 (0.26) 95 0.88
Low: -0.32 (0.27) 35 0.79 PHY
0

hgh
+2o
hgh
).
Iow
2o
Iow
).
a

93

Table C3: EBA Results for the Lag Variables of Interest (Dependent Variable Under-5 Mortality, UFM
1
)
(m)
()
Extreme Bound
Value
Robust/Fragile
GDP per capita
(log) (GDP
0
)
High: -3.18 (5.77) 35 0.88 PHY
0
, URB
0
, GIN
0
, GOV
1

Upper: 8.37
Lower: -14.33
Fragile Base: -13.02 (2.80)*** 95 0.88
Low: -5.46 (4.44) 39 0.88 GIN
0
, GOV
1

Female education
(EDU
0
)
High: -0.13 (1.14) 35 0.88 PHY
0
, GIN
0
, GOV
1

Upper: 2.14
Lower: -5.50
Fragile Base: -3.20 (1.23)** 95 0.88
Low: -2.37 (1.57) 89 0.82 PHY
0
, GOV
1

African dummy
variable
(AFR)
High: 84.91 (15.20)*** 35 0.84 PHY
0
, GIN
0

Upper: 115.30
Lower: 38.03
Robust Base: 75.10 (8.36)*** 95 0.88
Low: 66.78 (14.38)*** 35 0.84 PHY
0
, URB
0
, GIN
0
, GOV
1

Number of
physicians
(PHY
0
)
High: 3.29 (2.37) 89 0.82 GOV
1

Upper: 8.03
Lower: -15.37
Fragile
a
Base: 2.72 (2.68) 95 0.88
Low: -5.51 (4.93) 35 0.88 GIN
0
, GOV
1

Governance quality
(GOV
1
)
High: -12.50 (6.37)* 89 0.82 PHY
0

Upper: 0.23
Lower: -25.34
Fragile Base: -11.87 (5.94)** 95 0.88
Low: -12.53 (5.22)* 89 0.82 PHY
0
, URB
0

hgh
+2o
hgh
).
Iow
2o
Iow
).
a
94

Table C3: EBA Results for the Lag Variables of Interest (Dependent Variable: Under-5 Mortality, UFM
1
) (continued)
(m)
()
Extreme Bound
Value
Robust/Fragile
Urbanization
(URB
0
)
High: 0.15 (0.21) 95 0.82 GOV
1

Upper: 0.56
Lower: -0.49
Fragile
a
Base: 0.14 (0.23) 95 0.88
Low: -0.13 (0.18) 35 0.84 PHY
0
, GIN
0

Gini index
(GIN
0
)
High: -0.41 (0.37) 39 0.84 URB
0

Upper: 0.33
Lower: -1.23
Fragile
a
Base: -0.45 (0.32) 95 0.88
Low: -0.54 (0.34) 35 0.84 PHY
0

hgh
+2o
hgh
).
Iow
2o
Iow
).
a

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