PREPARED BY: RECELYN CANDACE FAUSTINO

ECONOMIC HISTORY POPULATION GROWTH, AND MEDICAL CARE

ECONOMIC GROWTH HAS DETERMINED THE SHAPE OF HEALTH CARE

BIRTH RATES, DEATH RATES , AND POPULATION GROWTH
Population growth is determined by the number of births minus the number of deaths (ignoring immigration, which just transfers people between different parts of the world). Stated in percentage terms:

Natural Rate of Population Increase = Birth Rate - Death Rate

BIRTH RATES, DEATH RATES , AND POPULATION GROWTH

BIRTH RATES, DEATH RATES , AND POPULATION GROWTH
It is important to recognize the numerical effects of compounding: how small differences in rates turn into large differences in size over time. If births and deaths are both 4 percent per year, the population is stable, neither growing nor shrinking. If there is a slight increase in births, to 4.1 percent a year, the natural rate of increase becomes 0.1 percent und population will double in seven hundred years, as it did through much of the agricultural age. If births rise further to 4.2 percent (i.e., 0.2 percent net increase), the Population will be four times larger in seven hundred years. A growth rate of 1.0 percent a year means the population will double every seventy years, a total population growth of 106,000 percent in a sevenhundred-year time span.

1. THE STONE AGE 

The Stone Age began with the emergence first hominids in Africa about 5 million years ago.  People lived in small bands as a hunter-gatherers, with a simple family/tribal social structure and little physical or intellectual capital to improve productivity.  Population was limited by the amount of food in the immediate area.

1. T HE STONE AGE 

Population growth during the stone age occurred primarily by expansion into new territory.  As a tribe got too large for the local area, some family groups spilt off and occupied new land.  Evolution and new technology meant better exploitation of the existing food supply, not increased productivity.  Homo sapiens displace homo erectus because the former was more at hunting and killing, gathering and storing food, and building shelter.  By the end of stone age, those limits had already been reached in some fully populated areas.  The rising population in lone settled land overfilled with people may have contributed to the development of animal husbandry and plant cultivation to feed the excess population, initiating the Agricultural Age.  The Stone Age began with the emergence first hominids in Africa about 5 million years ago.

2. THE AGRICULTURAL AGE 

population growth accelerated with the development of agriculture, but only slowly at first.  Agriculture appears to have originated around 10,000 B.C -7,000 B.C in the river valleys of Tigris, the Euphrates and the Nile and subsequently developed independently in china and the Peruvian highlands.  People began to settle permanently in one place.  Irrigation canals were dug around roads were-built.  The same acreage could support more permanent farmers than roaming huntergathetrers.

Investment & Trade
Farming takes investment. seed must be saved, fields plowed, and animal pens erected. A hunter might have worked at making a sharper spear or better root gatherer, but the increase in output was small compared with the gains obtained from farm improvements (building an irrigation ditch, selection of superior seed, the invention of the harrow or plow). In the Agricultural Age, many Farm investments, such as building a road or a large corral, were collective, benefiting the entire village. The returns on investment became larger when more people were involved. There is a synergy in bringing people together.

For trade and investment to occur, societies must develop property rights.

Civilization, War, and Government 
With the advent of the first great civilization-the Sumerians-population began to  increase rapidly.  Population growth rates increased to 0.07 percent per year (doubling in 1,000 years), about a hundred times the hunter-gatherer growth rate. Although the Sumerian empire soon fell, the Pharoic theocracy established along the banks of the Nile in Egypt endured for centuries.  As cities grew, the population split into two classes: peasants who worked the land and continued to live at subsistence level and rulers who controlled all the wealth.  While hunter-gatherers were all at the same level, working two to four hours a day to obtain subsistence plus a little extra, farmers had to work much harder, eight to twelve hours a day, to obtain the same amount of food.  Why, then, did anyone become a farmer? People became farmers probably out of necessity rather than choice.

Decline in Civilization leads to Population Decline

Food Supply Determines Population 
From 150050theEurope and world populations grew at an average annual rate of 0.25% (doubling in 300 years).  Food supply was the fundamental constraint on Growth since the great majority of people lived at a subsistence level.  A study of the Italian district of sienna from 1550-l715 shows that increases in prices for grain were associated with malnutrition and death.  As people die, there are fewer mouths to feed; therefore, demand falls and Prices fall.  When the food id abundant and prices are low, peasants are more able to marry and have children, the number of mouths to feed rises, demand increases, prices jump, and the cycle starts over again.  As the Agricultural Age drew to a close and the transition to an urbanized industrial society began, scarcity of food continued to be a major issue' Salaried work1l-were little better off than peasants, because it took 80 percent their salaries to get enough to eat.

The Rise of Economics 
As people moved from rural estate, where they had been cared for (and/or owned) by a feudal lord, into cities where they worked at jobs for wages, the economic organization of society evolved from one based on tradition to one based on money. Only after exchange became standardized through the use of money could regularities be observed and statistical analysis be performed.  The development of accounting and statistics marked the emergence of a new information technology" that revolutionized trade.

The Malthusian Hypothesis 
Malthus hypothesis was that any increase in productivity could provide only a temporary boost to the standard of living.  Over time, increases in the number of people to be fed would use up all the productivity increase; therefore, on average, people would be no better off than before-still living at a subsistence level.  The Malthusian hypothesis is based on two key assumptions:

that (l) food supply is a primary constraint on population growth. growth. and (2) any increase in the number of people would inevitably lead to more crowding or to farming of less desirable land so that the declining marginal productivity, of labor (and hence, wages) would bring down the standard of living.

The Malthusian Hypothesis
The law of diminishing returns, as elaborated by Malthus, was a major intellectual contribution to economics. However, it applies only if the technology of production stays essentially the same. In England, Germany, France, and the United States, the same intellectual revolution that stirred Malthus to write his treatise. Led others to create a technological and commercial revolution so profound that productivity increases were continuous, and output grew much more rapidly than any natural increase in the number of people. A continuous excess of food gather goods became available for all to enjoy.

3. THE INDUSTRIAL AGE

Life was difficult at the start of the Industrial Revolution and often got worse for those who moved into cities to work in factories. Crowded slums and harsh working conditions caused disease. whereas diets on a farm could be supplemented by gardens and occasional hunting, in the cities food was monotonous and lacking in vitamins. As the countryside became enclosed (put under ownership of a lord rather than held in common) and people moved into cities, illness increased.

Why Malthus Was Wrong
There are two reasons Malthus' gloomy predictions were wrong. 

First, technological advance, rather than being a one-shot improvement, became a continuous process. Output expanded at an exponential rate as one invention led to another. In the Agricultural Age, the primary productive inputs were land and labor. The total supply of land is fixed, and any increase in the supply of labor meant more mouths to feed. In the Industrial Age, capital equipment, skilled labor, and Age knowledge became more important than land and unskilled agricultural labor. By 1950, a single farmer, sitting in an air-conditioned cab operating a combine, harvesting genetically engineered wheat, could feed more people per i00 acres than a dozen farmers could in 1750. Although the rate of productivity increase during the Agricultural Age averaged about 1 percent! a year, in the Industrial Age it rapidly tripled and sometimes exceeded 5 percent a year.

Why Malthus Was Wrong
There are two reasons Malthus' gloomy predictions were wrong. 

A second reason that Malthus's immiserating population growth failed to occur was that as death rates declined, birth rates also declined. With fewer children dying, parents chose to have fewer babies, and invested more in the education, medical care, and nutrition of each one. Parents acted in what they saw as the best interests of their families as they made decisions regarding how many children to have and how to care for them. Cumulatively, these individual decisions brought about a social revolution. It also changed the character of labor and accelerated technological advance, leading to higher wages and a rising standard of living.

Demographic Transition 
The process of economic development is linked to a dramatic change in national population known as "demographic transition."  When societies-are in the agricultural stage, many children die before reaching the adult hood.  High rates of mortality (4 to 5 percent) are matched by high rates of fertility,(also 4 to 5 percent), so the total number of people is stable or just slowly increasing.  This equilibrium between births and death are radically ,changed during the process of economic development. With greater material Wellbeing, mortality rates decline toward I to 2 percent. Since birth rates are still high, the rate of population growth (births-deaths) is very rapid, 2 to 4 percent a year, enough to double the population in each generation (every fifteen to forty years). Such explosive growth does not continue indefinitely

Demographic Transition 
.Although constantly increasing economic output should not necessarily cause birth rates to fail, it is observed that birth rates do in fact fall in virtually every developed country.  As children cease to be productive farm assets and become a costly form of family consumption, families decide to concentrate more care and investment on fewer children. This decline in fertility does not require the use of modern birth control techniques. Delayed marriage, extended breast feeding, infanticide, and other methods have been used to restrict population to desired levels in many countries without recourse to contraceptives. As economic development continues (l-2 percent) is eventual matched by low fertility (1-2 percent) so that the total population is again stable or slowly growing, and the process off demographic transition complete (see Figure 16.1).

DEMOGRAPHIC CHANGE, INCOME DISTRIBUTION, AND THE RISE OF THE MIDDLE CLASSES

In a hunter-gatherer society, there are no wealthy people. The tribe as a whole is living at the subsistence level with little accumulated wealth in the from of weapons or religious objects. One or two bad years can spell disaster. An agricultural society, in contrast is hierarchal And often has considerable wealth, almost all of it concentrated at the top. Most of the agricultural population consists of rural peasants. As agricultural civilizations develop, the number of traders, soldiers, craftspeople, merchants' and other members of the bourgeois who Live as free ³citizen´ in (mostly small) cities increases, but they are always a minority. The kings authority is absolute, and almost all of the wealth stays under his control.

4. THE INFORMATION AGE

The advent of a post-industrial Information Age is marked by the ubiquitous appearance of the television and the computer. The labor force is concentrated in services rather than agriculture or manufacturing. Information specialists, the dominant workers, spend their entire childhood and many years of adulthood in school investing in the skills required for active participation in a global economy linked by communications networks where massive amounts of capital flow between countries with a few keystrokes. Such training can be prevalent only in a population with long life expectancies and few children per family.

4 . T H E I N F O R M AT I O N A G E

In this era, most people are healthy and wealthy enough that personal income affects longevity and fertility primarily through lifestyle choices, rather than lack of food or shelter. What was rare throughout history the ability to retire with independent means and sufficient fitness to travel the world after age sixty-five, has become not just attainable, but an ordinary reality for most people in post-industrial economies

DISTRIBUTION OF INCOME AT DIFFERENT STAGES OF DEVELOPMENT

INCOME & HEALTH
The connection between poverty and poor health was noted long ago. The connection is described in ancient Greek and Chinese commentaries, and detailed empirical studies were conducted in London and Paris in the nineteenth century. As economic historians carefully review the data, it becomes clear that although economic growth may have been the major contributor in lengthening life expectancy, its effects were neither uniform across groups nor steady over time. Average health appears to have declined significantly in the united States during the early decades of the nineteenth century despite rising per capita incomes; therefore, life expectancy was probably not much greater in 1900 than it was in 1800. Most commentators assume that extreme poverty has the most deleterious effects and that the relationship between income and health is nonlinear, with gains in life expectancy becoming smaller as one moves up the income scale.

INCOME AND THE VALUE OF MEDICAL CARE
Given the strong relationship between mortality and income, questions have arisen regarding the importance of medical care in increasing life expectancy. Although perhaps hard to believe, it is difficult to demonstrate conclusively that medical care has an independent effect on average life expectancy. Complication is that more and better medical care is usually associated with higher incomes, making the independent effect of medicine harder to disentangle

IN C O ME AN D T H E VALU E O F ME D IC AL C AR E
Many researcher agree that medical care has had some, but not a large, effect on life expectancy ± perhaps attributing 10 percent of gain from forty ± seven year to seventy seven years during the 20th century to increased use and effectiveness of medical care of course, the gains from the medical science are much larger because the advance of medical knowledge is responsible for demonstrating the importance of hand washing, sanitation, smoking cessation, food sterilization, and balanced diet, and a host of other lifestyle factors that contribute to health.

REDUCING UNCERTAINTY: THE VALUE 0F LIFE AND ECONOMIC SECURITY

Economic development not only meant that most people had more; it also meant that the risk of losing it all were vastly reduced. For the first time, it was possible and reasonable for ordinary people to plan for the future -to decide how many children to have, whether or not to go to school or start a business, and to save for retirement. The improvements in health and income brought about by economic development had a powerful and paradoxical effect: the more secure the future became, the more afraid workers became of losing that security.

THE VALUE OF RISK REDUCTION

THE VALUE OF RISK REDUCTION
Even if medical care is responsible for only a small incremental improvement in health, the value of that increment is increasing. consider how the value of reducing the risk of dying in the next ten years by 1 percent changes as workers become more well-off. If the average person has a 50-50 chance of dying in ten years, it is not worth changing the probability to 51-49. Yet if a healthy person has only a 1 percent chance of dying, eliminating this risk, or just cutting it in half is worth a lot. The value of risk reduction also depends on the level of income. In a subsistence economy where workers get paid only enough to buy food and rudimentary housing, they cannot afford to give up much of what they earn to buy medical care, even if such care would help them avoid future illness and death. on the other hand, a skilled industrial worker earning $40,000 a year can probably afford to pay $300 a month for health insurance and another $100 for vitamin supplements and a health-club membership. A rock star or corporate CEO earning $5 million a year can afford to spend hundreds of thousands of dollars just to keep looking young.

SOCIAL SECURITY AND HEALTH INSURANCE
Even though the poor agricultural masses may have been happy to get a chance to stay alive and perhaps get ahead, the industrial middle-class expected progress. If their lives did not constantly improve, or if something went wrong, they expected their employers or the government to do something to correct the problem.

PRECONDITIONS FOR CHANGING MEDICAL 0RGANIZATION
This chapter began with a list of four precondition for the development of modern medical care: effective technology, sufficient wealth, low risk of death, and insurance financing. These factors are not independent of each other, but mutually reinforcing. Increasing wealth meant more food, which reduced the risk of dying. Increased longevity also meant greater productivity and hence even more health. As trade developed, financial markets increased in complexity and insurance contracts were needed to better manage capital. Broad participation in pooled financing could only occur when most workers were relatively healthy and well-off.

THE RISE OF MEDICAL TECHNOLOGY
Medicine is as old as mankind. One of the earliest known written document, the ³Code of Hammurabi´, contains references to medical controls and malpractice in laws of this Assyrians kingdom circa 2200. The Hippocratic oath, written about 1 B.C. and still quoted in medical writings today, put forth principle that physicians should ³ first, do no harm.´ Good advice , because for thousands of years physicians could do little to cure illness or reduce the risk of death. Broadly speaking, the term ³medical technology´ can be used to refer to the medical technology procedures, equipment, and processes by which medical care is delivered. Examples of changes in technology would include new medical and surgical procedures (e.g., angioplasty, joint replacements), drugs (e.g., biologic agents), medical devices (e.g., CT scanners, implantable defibrillators), and new support systems (e.g., electronic medical records and transmission of information, telemedicine). There is very little in the field of medicine that does not use some type of medical technology and that has not been affected by new technology.

THE RISE OF MEDICAL TECHNOLOGY
Although all four conditions needed for the development of modern medicine (technology, wealth, low mortality, organized Financing) operate concurrently and reinforce each other, medical technology is more a result of the process than a cause. Society's accumulation of the necessary prerequisites for modern medicine began with the rise in wealth brought about by trade and technology, which quickly led to a decline in mortality, and subsequently to a decline in the birth rate. The application of science and industrial technology to medicine not only took time, it took money and an independent profession dedicated to continuous improvement. Both organized medicine, with its schools and professional associations, and organized financing, with insurance risk pooling and government funding, were necessary to carry out that research and pay for years of trial and error as treatments were perfected. The development of integrated health care systems and decentralized contracting will bring medicine to the final stages of the Industrial Revolution productivity enhancements, and will evolve in new directions to meet the challenges of the information age.

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