Revisiting the effect of democracy on population health

Abstract I use a novel dichotomous measure of democracy to simulate a quasi-natural experiment and implement a difference-in-differences analysis to identify the heterogeneous treatment effect of democracy on population health across countries from 1960 to 2010. To counteract potential sources of bias resulting from unparallel and stochastic trends between treated and control units, I adopt a principal components difference-in-differences estimator that exploits factor proxies constructed from control units to account for unobserved trends. The main results indicate that countries that transitioned from non-democracy to democracy are more likely to experience health improvements, compared to countries retaining non-democratic institutions. However, the health-enhancing impact of democratization turns out to be much smaller in size than previously established. I posit that conventional estimates exaggerate the economic significance of the health returns to democratization due to inadequate attention to cross-border spillovers, global common shocks, and worldwide heterogeneity in the democracy-health nexus.