Health economics is generally considered a young discipline, with many attributing its ‘birth’ to the seminal paper by Kenneth Arrow on the welfare economics of medical care. While the work of Arrow has had an enormous impact on the development of the discipline, isolated contributions to health economics actually go back centuries. Our purpose in this blog is to highlight a few of these with a special focus on the American economist and statistician Edgar Sydenstricker (1881-1936).
As far back as the 17th Century, the Oxford polymath Sir William Petty developed a cost-benefit framework to evaluate a proposal to tackle the plague. In the 19th century, the epidemiologist William Farr used a human capital approach to estimate the value of life, which was then used in a cost-benefit analysis of the sanitary improvements occurring towards the end of the 19th century in the UK.
Aspects of health and life insurance were also the subject of analysis and debate for centuries. For example, towards the end of the 19th century, proposals were circulating in Australia for combining health insurance with a requirement for regular medical check-ups. While this idea received much criticism at the time, it anticipates monitoring devices for health insurance that are only just now coming to fruition.
Our recent article Edgar Sydenstricker, a pioneer of health economics, highlights the numerous health economics contributions of Sydenstricker. He published widely on health economics issues between 1915 and 1936, and his research in this area was closely connected to his statistical analyses and epidemiological work. He also contributed to public policy debates in the 1930s when he made proposals for compulsory national health insurance in the United States and helped develop the first US National Health Survey.
Edgar Sydenstricker spent a brief period as a post-graduate fellow in political economy at the University of Chicago, but for most of his working life, he was engaged in multidisciplinary research at the US Public Health Service and later at the Milbank Memorial Fund.
Academic economists of his time had little interest in health economics. For example, a recent investigation into the impact of the 1918-20 influenza pandemic on the economics profession turned up very little. In contrast, Sydenstricker published on the influenza pandemic in an article where he stratified mortality by the level of income to understand its impact on health inequalities. He was also involved in an extensive investigation, led by public health researcher Joseph Goldberger, to understand the causes of the disease pellagra, which was causing thousands of deaths in the south of the US. Throughout Sydenstricker’s career, he was a prolific publisher (see Figure below), and like many health economists today, he worked mainly with a team of interdisciplinary collaborators. He published mostly in public health journals but also had some articles in the Journal of the American Statistical Association and in the Journal of Political Economy.
Sydenstricker made important contributions to the economic evaluation of public health interventions that included using methods akin to difference-in-difference to evaluate efforts to control tuberculosis in New York state. He later studied the impact of the Great Depression, observing that while rates of mortality were falling, morbidity often rose for families who had lost income.
At the height of the Great Depression, he wrote the article Economy in public health in which he made a case for evaluating government expenditure to ensure that “appropriations of public funds for public health place upon health authorities a very definite responsibility for the effective use of the money”.
However, Sydenstricker’s relevance as a health economist is perhaps best illustrated by his work on pellagra, which we analyse more thoroughly in a forthcoming article in the Journal of Economic Perspectives. Sydenstricker and his co-workers were able to show that cases of pellagra varied greatly by level of income. To better understand the relationship with income, Sydenstricker recognised the need to develop some type of equivalence scale. He collaborated closely with the economist Willford King to empirically derive scales that are actually more refined than those in use today (e.g., the OECD Equivalence Scale). While their research did not allow them to identify the exact cause of pellagra, it strongly suggested that some kind of dietary deficiency was responsible. Ultimately, pellagra was shown to be caused by a lack of the vitamin niacin, which can occur in populations with high consumption of corn.
Why is he largely unknown among health economists? Take another health economics pioneer, Selma Mushkin (1913–1979), who also worked for the US Public Health Service. She made no reference to him in her article Toward a definition of health economics published in 1958. It is possible that his sudden death in 1936 and the lack of a broader team of economists working with him meant that health economics largely died with him, only to be reinvented by a later generation of economists.