From Our Blog

Good physical health critical to economic well-being

The President of the Federal Reserve Bank of Philadelphia, Patrick T. Harker, talks about how improving the health of neighbors helps everyone.

[This blog is crossposted from an op-ed that was published on Philly.com]

‘At least I have my health” is a phrase we use to signify that, of all the items we possess, good health is the most important to our personal well-being. But we often don’t consider the important role good health plays in our economic well-being too.

The social determinants of health and economic well-being will be a key topic in my May 22 commencement speech to graduates of the Jefferson College of Health Professionals and College of Pharmacy. I am sure these grads look forward to taking their places in our healthcare system. But, I wonder, do they appreciate their importance in our economic future? Indeed, helping households and communities achieve good physical health is critical to promoting economic growth.

To be clear, I am not talking about increasing access to health-care providers and insurance. I leave that to the politicians. I am talking about a holistic approach to good health in all of our communities.

Where you live goes a long way in determining how you feel. Being able to see a doctor or dentist or go to an emergency room is important, but so is having a home free from lead or asthma irritants. Most of us know we can probably eat better or should drop a few pounds, but a healthy diet is a challenge when you live in a “food desert,” with little access to fresh produce and unprocessed foods.

It is no surprise that poorer households have worse health outcomes. Financial instability raises physical stress levels. Poor adults are twice as likely as affluent adults to have diabetes and they experience coronary heart disease at a rate that is nearly 50 percent higher than that of the most affluent adults.

In recent research, economists Anne Case and Angus Deaton traced the rising mortality rates among middle-aged, non-Hispanic whites to increases in deaths from drug overdoses (including opioids), suicide, and alcohol-related diseases. They labeled these fatalities “deaths of despair,” because stagnant wages and fewer work opportunities have created a culture of hopelessness for those who are less educated and less skilled in our economy.

We as a nation must address this link between social determinants and physical health.

When Dr. Tom Friedan, former director of the U.S. Centers for Disease Control and Prevention, created “the health impact pyramid,” he found socioeconomic factors were the base of the pyramid – the area where money spent has the largest impact on health. So, investing in better housing, education, and job training in our poorer communities offers a “bigger bang for the buck” than money spent on expensive items such as clinical interventions. It may be a key way to slow the growth in health-care spending, which now accounts for almost 18 percent of our economic output.

The Federal Reserve is working to understand the interconnectedness of social factors, physical health, and economic well-being. Here at the Philadelphia Fed, our new initiative, the Economic Growth and Mobility Project, is championing research and best practices that move individuals, families, and communities out of poverty and into prosperity. Key to this effort is understanding how poverty is diminished – or worsened – by the health circumstances in our communities in Pennsylvania, New Jersey, and Delaware.

Elsewhere in the system, the San Francisco Fed is leading a venture with the Robert Wood Johnson Foundation to address ways to build and sustain healthy communities. Additionally, regional Fed banks bring together participants in community development, public health, and health care to share research and best practices. Just last year, in partnership with the University of Pennsylvania’s School of Public Health, the Philadelphia Fed hosted a forum on the topic “financial health is public health.” Finally, we are exploring how banks can leverage their Community Reinvestment Act commitments to support healthy outcomes such as financing a new water treatment plant or rehabbing housing to remove lead paint or mold.

The 2017 graduates at Jefferson may not realize it, but when they work in health care they will not just be providing help. They will also be creating a more optimistic future, not just for their patients, but for all of us. That’s because healthier people are more likely to be in the labor force and earning a paycheck. Businesses gain from fewer sick days and improved productivity. Less government money is spent on social programs and more funds come in as tax revenues, providing money for infrastructure and debt repayments.

If the physical well-being of our most vulnerable neighbors can be improved, we will all benefit.

About the Author

Patrick T. Harker

Patrick T. Harker took office on July 1, 2015, as the 11th president and chief executive officer of the Federal Reserve Bank of Philadelphia. In this role, Harker participates on the Federal Open Market Committee, which formulates the nation’s monetary policy.

Before taking office at the Philadelphia Fed, Harker served as the 26th president of the University of Delaware. He was also a professor of business administration at the university’s Alfred Lerner College of Business and Economics and a professor of civil and environmental engineering at the College of Engineering.

Before joining the University of Delaware in 2007, Harker was dean and Reliance Professor of Management and Private Enterprise at the Wharton School of the University of Pennsylvania. Prior to being appointed dean in 2000, Harker served as the Wharton School’s interim dean and deputy dean as well as the chair of its operations and information management department. In 1991, he was the youngest faculty member in Wharton’s history to be awarded an endowed professorship as UPS Transportation Professor of the Private Sector. He has published/edited nine books and more than 100 professional articles. From 1996 to 1999, he served as editor-in-chief of the journal Operations Research.

In 2012, Harker was named a fellow of the Institute for Operations Research and the Management Sciences (INFORMS) and a charter fellow of the National Academy of Inventors. He was also named a White House fellow by President George H. W. Bush in 1991 and served as a special assistant to FBI Director William S. Sessions from 1991 to 1992.

Harker serves as a member of the Select Operating Committee of Select Greater Philadelphia. He previously served on the boards of Catholic Relief Services, Pepco Holdings, Inc., and Huntsman Corporation and was a founding member of the board of advisors for Decision Lens, Inc. Harker was also a nonbanking Class B director of the Philadelphia Fed from 2012 to 2015.

Harker has a Ph.D. in civil and urban engineering, an M.A. in economics, and an M.S.E. and B.S.E. in civil engineering, all from the University of Pennsylvania.