National accounts of economic output and prosperity, such as gross domestic product (GDP) or net domestic product (NDP), offer an incomplete picture of economic well-being. Building on previous work to improve estimates of the levels of economic output, this paper proposes a new methodology to measure economic fluctuations that incorporates monetized changes in health and applies the method to U.S. and global national accounts over the past 50 years. In particular, we incorporate into an expanded measure of GDP the dollar losses associated with mortality, treating mortality as depreciation of human capital analogous to how net domestic product (NDP) treats depreciation of physical capital. Because past evidence has shown that mortality tends to be pro-cyclical, GDP growth is partially offset by losses in health. Accounting for the fluctuations in health is quantitatively important to the measurement of business cycles across the world: mortality adjustments to GDP reduce the deviations from trend during the past 50 years by about 30%, both in the United States and internationally. Our results offer new perspectives on fiscal and monetary policies intended to manage the allocation of activity over the cycle and economic theories designed to interpret macroeconomic fluctuations.
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