A state government starts free basic health care for elderly people who no longer work. This spending will not raise the output of goods and services. Which view supports this spending, and why?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Human development, since basic health is important in itself, even if it does not raise labour productivity
The spending does not raise output, so the human capital view would not support it. The human development view does, because it treats basic health as important in itself.
Option (1) Human development, since basic health is important in itself, even if it does not raise labour productivity — Correct. In this view, welfare should rise through health spending even without a rise in labour productivity.
Option (2) Human capital, since health spending increases the supply of a healthy labour force — Incorrect. These elderly people no longer work, so the spending adds nothing to the labour force. The human capital view values health only for its effect on productivity.
Option (3) Human capital, since human beings are ends in themselves — Incorrect. “Human beings are ends in themselves” is the idea behind human development. Human capital treats human beings as a means to raise productivity.
Option (4) Human development, since any investment in health is unproductive if it does not raise output — Incorrect. Calling health spending unproductive when it does not raise output is the human capital view. It would argue against this spending.
NCERT (2026-27): “4.4 Human Capital and Human Development The two terms sound similar but there is a clear distinction between them. Human capital considers education and health as a means to increase labour productivity. Human development is based on the idea that education and health are integral to human well-being because only when people have the ability to read and write and the ability to lead a long and healthy life, they will be able to make other choices which they value. Human capital treats human beings as a means to an end; the end being the increase in productivity. In this view, any investment in education and health is unproductive if it does not enhance output of goods and services. In the human development perspective, human beings are ends in themselves. Human welfare should be increased through investments in education and health even if such investments do not result in higher labour productivity. Therefore, basic education and basic health are important in themselves, irrespective of their contribution to labour productivity.” |