Why We Need to Invest in Public Health Capital
Michael Grossman's influential health capital model conceptualizes health as a form of capital that individuals build through their choices (Grossman 1972). Like financial capital, health capital accumulates through investment and depreciates over time. Maintaining health requires people to sacrifice time and money to choose activities that build healthy bodies. Published in the early 1970s, this influential theory has been cited over 11,000 times. The model emphasizes the way our bodies and minds retain the scars of past choices for decades. It predicts addiction cycles and explains why education is a critical determinant of the desire to be healthy.
According to Grossman's model, individuals act as though they can observe their body's lifetime accumulated health capital stock. They choose behaviors and commodities that either enlarge this stock or allow it to depreciate. Each person’s choices are the fundamental explanation of how healthy they are.
A Neoliberal Blind Spot
For all its influence, the Grossman model contains a remarkable limitation: it offers policymakers only one lever to improve population health—reducing the prices of health products that individuals can purchase. Despite health economists’ penchant to give policy advice, our fundamental framework does not theorize policies that generate non-marketed public goods like clean air, safe drinking water, food safety regulations, accessible green parks, or effective disease surveillance systems.
This blind spot is no accident. The model is fundamentally rooted in a neoliberal perspective that places the individual as the sovereign arbiter of their health through market choices. Health economics as a discipline has flourished alongside this individualistic conception of health and the trillion-dollar global market for personally consumed health services, pharmaceuticals, medical devices, and health-related financial products.
But despite neo-liberalism, health ecology still matters. There truly are healthy and unhealthy places. Ask any real estate agent. People want to be in places that make it easier to raise healthy families.
Introducing Public Health Capital
Consider two people making identical personal health choices—same diet, same exercise routine, same vaccines. Yet one lives in a city with deteriorating water infrastructure, poorly enforced air quality standards, and inadequate food safety inspection. The other lives in a city with robust public health systems. Their health outcomes will diverge, not because of their individual choices, but because of differences in what we might call "public health capital."
Public health capital represents the accumulated stock of community-level investments that make healthy choices the default, easy option for residents. It encompasses the physical infrastructure for sanitation and water purification, the trained workforce enforcing air quality and food safety standards, the systems regulating healthcare professional performance, and countless other elements of the public health architecture.
Like individual health capital, public health capital has several key characteristics:
Long duration: Infrastructure and systems built today continue providing benefits for decades.
Depreciation: Without ongoing investment, public health systems deteriorate—water systems age, institutional knowledge is lost, regulatory capacity erodes.
Requires a choice to invest: Recruiting a capable workforce, maintaining physical infrastructure, and building political consensus augments a city's public health stock.
Complementarity with individual choices: Public health capital creates environments where healthy choices become easier for everyone. Neighbors copy their neighbors. Social mimicry reinforces good choices in a cascade and healthy places percolate into the culture over time.
Unlike individual health capital, economic theory predicts that public goods like clean air or safe water will be systematically underprovided because everyone benefits regardless of whether they personally contributed. Fiscal hawks will always find public health easy prey because vocal defenders are scarce. We must do a better job in explaining the benefits of collective investment in the health of places.
The Measurement Challenge
One obstacle to advocating for public health capital is measurement. Unlike individual health that can be approximated through metrics like BMI, resting heart rate, blood tests and exercise capacity, public health capital cannot be directly observed.
A starting point might be annual budgets for public health departments, refined to account for workforce quality. A small group of health economists, myself included, have produced a persuasive set of results to show that spending on public health departments is a powerful way to improve population health (Mays and Smith 2011, Brown 2014, Leider, Alfonso et al. 2018, Cardona, Anand et al. 2021)
A New Research Agenda
Understanding public health capital opens crucial questions: What is the return on investment compared to other things that city planners want to do? How quickly does it depreciate without maintenance? Can public health capital investments reduce expenses for sickness care? If returns on public health capital can be measured, we can build the case for rebalancing our health spending on economic efficiency grounds. We can rightly see public health as a gift that societies give to themselves and the next generation.
Completing the Picture
Public health capital retains Grossman’s insights about individual agency, but adds ecological common sense by acknowledging that health emerges from both individual choices and the terrain in which they occur. That terrain can be and must be deliberately improved and maintained.
As non-communicable diseases dominate the global disease burden and health inequities widen, the limitations of purely individualistic frameworks become impossible to ignore. The question isn't whether individuals should take responsibility for their health—of course they should. The question is whether we've systematically underinvested in the community-level capital that makes individual health efforts more effective and equitable. The new framework of public health capital can help us understand exactly how much this underinvestment costs us—and what we stand to gain by correcting it.
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References
Brown, T. T. (2014). "How effective are public health departments at preventing mortality?" Econ Hum Biol 13: 34-45.
Cardona, C., N. S. Anand, Y. N. Alfonso, J. P. Leider, J. M. McCullough, B. Resnick and D. Bishai (2021). "County health outcomes linkage to county spending on social services, building infrastructure, and law and order." SSM Popul Health 16: 100930.
Grossman, M. (1972). "On the Concept of Health Capital and the Demand for Health." Journal of Political Economy 80: 223-255.
Leider, J. P., N. Alfonso, B. Resnick, E. Brady, J. M. McCullough and D. Bishai (2018). "Assessing The Value Of 40 Years Of Local Public Expenditures On Health." Health Affairs 37(4): 560-569.
Mays, G. and S. Smith (2011). "Evidence Links Increases In Public Health Spending To Declines In Preventable Deaths." Health Affairs 30(8): 10.1377/hlthaff.2011.0196.
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