The complex link between poverty and health

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Poverty is one of the most studied phenomena in economics, yet its relationship with health remains stubbornly difficult to unpick. In this episode of VoxDevTalks, Adriana Lleras-Muney discusses the link between poverty and health, what drives that relationship, and what, if anything, policymakers can do about it.

The poverty–health gradient: A global pattern

Across countries and within them, the link between poverty and health is consistent: richer people live longer. Yet the relationship is not linear. The evidence points to a concave curve – health improves rapidly as income rises from very low levels, but additional wealth buys progressively less health at the top of the distribution.

"When you're poor, there really is a lot that money can buy to improve your health, and when you're rich, that's somewhat less true."

This is why researchers focus specifically on poverty rather than income more broadly: it is at the bottom of the distribution where the stakes are highest and the potential gains from intervention are greatest. Measuring poverty itself is complicated in low-income settings, where many people work in agriculture and informal activities, and where surveys of amenities serve as proxies for income.

Causation runs in both directions

One of the central complications in this field is that the relationship between poverty and health is bidirectional. Poor health causes poverty just as poverty causes poor health. When people fall ill, they can rapidly lose the ability to work and care for themselves – a dynamic that has historically motivated social insurance programmes across wealthy nations.

"When people are unhealthy, they rapidly become poor. And we also have evidence that if people are sick and we treat them and they are no longer sick, their economic circumstances improve substantially."

This two-way causation makes empirical research considerably harder. Researchers cannot simply observe that poor people are less healthy and infer the direction of the effect. Scholars remain divided: some argue that in rich countries today the dominant direction runs from income to health; others contend that the reverse has been more clearly established empirically.

Why cash transfers don't always improve health

One might assume that giving poor people money would straightforwardly improve their health. The evidence, however, is more ambiguous. The form and duration of a transfer matters enormously – a one-time unexpected payment triggers very different behaviour from a long-term salary increase or stable employment. Some studies have found that on the day people receive unexpected cash, risky behaviours increase and mortality risk rises.

"Each of these circumstances, when we observe people getting money in these kind of thought experiments, a lot of different things happen, and not all of them are necessarily positive."

The counterfactual matters too. Eliminating a drug addiction, for instance, may not lift someone out of poverty if they live in a community with no jobs and no economic opportunities. And the scale and duration of transfers used in experiments is typically far smaller than the difference between being rich and being poor, making it difficult to draw firm conclusions about what sustained income gains would achieve.

Why being poor is not the same everywhere

Not all poor people have equally poor health outcomes, and that variation demands explanation. Two communities can have similar income levels but strikingly different life expectancy. Among the rich, health outcomes are broadly similar wherever they live; it is among the poor that context appears to make a decisive difference.

Factors such as the prevalence of violent crime, availability of drugs, and strength of social connections all appear to moderate the health consequences of poverty. Loneliness is robustly associated with worse health, meaning that communities where social ties remain strong may partially offset the damage of material deprivation.

"Being poor is not the same everywhere."

Exactly which contextual factors account for these differences, and by how much, remains an open research question, but the variation itself is striking and has important implications for where and how interventions are targeted.

Barriers to effective health interventions in low-income settings

Even where effective health technologies exist – vaccines, oral rehydration therapy, basic treatments for infectious disease – uptake in lower-income countries is often far below what their cost and efficacy would predict. The barriers are rarely purely financial. Physical distance to facilities, cultural norms, institutional distrust, poor information, and corruption can each prevent populations from accessing interventions that are cheap and known to work.

The COVID-19 pandemic illustrated this vividly: information about vaccines was not trusted simply because of who was delivering it. Historical experiences of governments or foreign actors providing unreliable or harmful guidance have left lasting scepticism that even technically correct public health messaging struggles to overcome.

"Getting people to understand what you're saying and believe what you're saying and do the thing you want them to do is not so simple."

The case for public health insurance and preventative healthcare

The strongest evidence-based recommendation to emerge from the research is that universal or near-universal public health insurance tends to improve population health. Almost every wealthy country has some version of such a system, and the evidence broadly supports its effectiveness. But a nominally free system that lacks trained staff, medicines, or accessible facilities delivers little in practice.

For lower-income countries, the challenge is not just whether to establish such a system but how to fund and deliver it with constrained public resources. Equally important is shifting the emphasis from treatment to prevention. High-tech acute interventions – bypass surgery, advanced oncology – are effective but extremely expensive. Investments in vaccination, nutrition, mental health, and behavioural risk factors could reduce the burden on healthcare systems long before individuals require acute care.

"If we can also prevent and manage the conditions that people have before they get to the point where they need that high tech intervention that would also be very effective."

Reference

Lleras-Muney, A, H Schwandt, L R Wherry (2025), "Poverty and health," Annual Review Economics, 17: 31–56