In relatively poor economies, modest expenditures on public health (immunization of children) can produce large improvements

What does this imply about the accuracy of the growth rate of real GDP as a measure of national well-being? How is the situation different in rich economies?

Expenditures on public health are included in GDP, but the resulting improvement in health is not. Indeed, improved public health may reduce some medical expenditures. The result is that GDP understates improvement in national well-being. In rich economies, rapidly rising medical expenditures are counted in GDP, though a portion is then deflated by rising prices in the health sector. To the extent that expenditures result from medical conditions such as obesity, it seems unlikely that well-being is improving faster than expenditures. The tendency for the growth rate of real GDP to underestimate the rate of improvement in the health component of national well-being is less prominent in rich economies than in poor economies.