Reverse Causality


Health Economics

  • Is health a cause or an effect? The answer, depending on the context, can be either or both. 'Reverse' causality refers either to a direction of cause-and-effect contrary to a common presumption or to a two-way causal relationship in, as it were, a loop. Thus, higher incomes are associated with better health. But which causes which? Higher incomes are expected on balance to lead to better health but better health may enhance productivity growth and hence lead to higher incomes.