Macro damages from NCDs: another challenge for global governance Economics of NCD Risk Factor Prevention David Mayer-Foulkes CIDE Mexico

Long-term mutual impact of health on economic growth Human development: techno-physio evolution

Intergenerational transmission of health and SES Next Generation Family Wealth: Income, Education, Health Early Child Development Education Income, Education, Health Health

Cross-Country Human Development t Hum Leading countryt Hum Lagging country 1 t Hum Technology transfer Lagging country 2

Stratified and Divergent Human Development Intergenerational Evolution of Mean Regional Female HAZ (DHS data )

Cognitive Ability Dynamics in Mexico

Human development t Hum Poverty gap Failures in: markets, institutions, government nutrition immunization sanitation maternal care higher life expectancy literacy primary secondary tertiary higher education infectious diseases NCDs basic goods urbanization the digital divide autocracy democracy intergenerational cheap inputs have high impact informed choice essential

NCDs pose high health costs Largest global cause of mortality in people of working age In LAMICs, higher death rates at earlier age Worse for the poor in both poor and rich countries Not disease of affluent or elderly

… and will have high economic costs Labor Health care Disability NCD costs will increase dramatically and affect economic growth and human development

NCDs are largely preventable poor diet tobacco alcohol salt low exercise poor diet tobacco alcohol salt low exercise NCD

Environmental causes of NCD social, economic and cultural change global trade and marketing nutrition transition replaces rich fruit and vegetables diet with diet of animal fat calories, lower in carbohydrates ignorance poverty high prevalence of poor choices

Economic analysis of choice People act non-rationally, against own desires for future selves, imperfectly informed, affect others Not yet feasible to identify optimal interventions There is a social learning curve impact of market power almost absent from analysis (Suhrcke et al., 2006)

Public versus private Interventions should: – finance public goods and health services with substantial externalities – regulate or finance private health insurance – subsidize the poor (Musgrove, 1996) impact of market power almost absent from analysis

Global TNC advertizing impacts NCD Food: $11.0 billion US Restaurants: $3.8 billion US Soft drinks: $3.7 billion US Beer, wine and liquor: $1.6 billion US Drug industry: $9.4 billion US WHO’s total budget: $2.1 billion US

200 largest US firms: 40% of manufacturing ( ) 100 largest TNCs: 14.1% of world GDP (2007) 89.3% of FDI: mergers and acquisitions (2007) TNC foreign affiliate sales: $31 trillion (2 x US GDP); World exports $17 trillion (2007) Industrial Concentration is the Norm

WHO: action needed to combat NCD Chopra and Darnton-Hill (2004) compare the smoking and obesity epidemics TNCs and globalization at center of NCDs Sales and advertizing of tobacco, alcohol and junk food cause deficient “nutrition transition” and NCD Recommend legal action, health warnings, campaigns, academic vigilance, use of WTO rules that protect health

Mutual influence and aggregate choice: competitive markets consumers producers government

Mutual influence and aggregate choice: market power lobbying advertizing government consumers producers

Mutual influence and aggregate choice: global market power consumers lobbying advertizing government producers lobbying & advertizing producers consumers producers government WTO lobbying lobbying & advertizing

Research needed: economic impact of NCD Databases for joint analyses of: NCD risk factors, prevalence and treatment – intervention cost-effectiveness – microeconomic links, longitudinal datasets – macroeconomic linkages – coordinated across countries and with past databases – lifecycle impact – economics of NCD risk factor prevalence demand and supply, learning market structure urban and rural policy

Economics of NCD risk factor prevalence. Choice and learning in: Risk factor consumption – demand and supply of diet, alcohol, tobacco, salt – industrial structure: market power, oligopoly, trade – impact of advertizing, information, education – Impact of policy, such as regulation Low exercise – impact of urban and rural characteristics and policies – demand and supply – sports Determine health impacts and policy alternatives

Lifecycle impact of NCD Next Generation Family Wealth, Health, Knowledge Early Child Risks Education Impact Adult Income, Education, Health, Labor Health Impact environment risks 12,000 hits costs

Cross-country data and policy platform Qualitative, comparative, country assessment – NCD risk factors, prevalence, policies, costs, analysis – Call for and disseminate information within governance structure Coordinated data construction – Promote common data design where possible, e.g. DHS – Add NCD dimension to existing databases – Include sectoral information, inequality – Advantage of country and sub regional variation

Conclusions There will clearly be a macroeconomic and long- term impact of NCD Policy evaluation requires economic research on 1.health impacts and costs 2.risk factor prevalence, including impact of market power This stage of human development requires  informed decision making  more sophisticated policies coordinating production, consumption and urban design for healthy living  this process can be part of generating democracy