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In October 2018, the World Bank launched the Human Capital Index, a tool to accelerate investments in the health and education of the next generation of workers, as part of the broader Human Capital Project. Dozens of countries have enthusiastically signed on as early adopters, but closing the human capital gap will depend as much on whether money is well spent as on how many new resources are mobilized.       

¡°More schools don¡¯t always translate into better learning outcomes. And more clinics don¡¯t necessarily mean better health,¡± said Asli Demirguc-Kunt, Director of Research at the World Bank at the time. ¡°Fortunately, we¡¯ve learned a lot in recent years about more effective ways to deliver health and education.¡±

At a recent Policy Research Talk, World Bank Research Manager Adam Wagstaff highlighted just a handful of the bonanza of new research on human capital¡ªin particular research related to the metrics tracked by the Human Capital Index. Wagstaff and researchers from across the World Bank working with developing country partners have unearthed valuable insights that can help countries better measure, manage, and build their human capital.

Perhaps most encouragingly, has found that investing in reducing childhood stunting can pay big dividends. A 10-pronged nutrition program for children under five could lead to a 20 percent reduction in childhood stunting at an average cost of US$3.85 per capita. The rate of return on this investment as a result of greater future worker productivity is an estimated 17 percent¡ªa figure that is comparable to the high returns typically seen from infrastructure investments.

While a focused nutrition intervention can pay dividends, fixing the broader health delivery system is much more challenging, according to Wagstaff. Many countries are far from providing health coverage that is both accessible and of high quality. Researchers judge this with a metric called effective health coverage, which takes into account both the percentage of the population that needs a service and that receives the correct treatment.

In Tanzania and Kenya, for example, fewer than 70 percent of doctors presented with a vignette about a patient with tuberculosis symptoms were able to identify the correct treatment. In Nigeria and Niger, that figure falls to less than 40 percent.

The depth of the problem may be even worse than what the vignettes suggest, however. In an conducted in India, actors were trained to convincingly portray the symptoms of tuberculosis and were assigned to visit clinics at random. Faced with a well-trained actor, only 10 percent of Indian doctors correctly identified the right course of treatment, compared to 70 percent in the case of a vignette. Researchers have termed this the ¡°know-do gap¡±¡ªthe large distance between what doctors know and the actual treatment they provide.

To overcome these large gaps in health care delivery, many countries provide financial incentives to either a health care user or provider. Over 20,000 articles have been written on these incentives, and Wagstaff and his colleagues wanted to know whether they could tease out any useful policy conclusions from this mountain of research. They undertook what Wagstaff termed a ¡®mega meta-analysis¡¯: they combed through the articles for those that were rigorous, focused on a low- or middle-income country, and dealt with maternal and child healthcare. In the end, they winnowed the mountain of 20,000 articles down to a tidy pile of just 65.

What the researchers found was encouraging. Across a range of interventions¡ªfrom antenatal care to safe delivery, immunizations, and modern family planning¡ªfinancial incentives for health care users have proven effective at improving coverage. Financial incentives for health care providers have also been effective, but only in specific areas such as safe delivery, family planning, and provision of a tetanus shot in tandem with antenatal care.

According to Wagstaff, the results point to a general rule of thumb for countries seeking to increase effective health coverage: financial incentives for health care users are helpful to get people in the health care system, while financial incentives for health care providers are useful to improve coverage when people are already in the system.

Pivoting to the other pillar of human capital, Wagstaff also highlighted recent experiments on how to improve education systems. In one experiment, at whether providing storybooks to families in rural Kenya, either in isolation or combined with other interventions like parental feedback, could boost young children¡¯s literacy. Storybooks alone proved to be highly effective even as a standalone intervention and were by far the most cost effective given the expense involved with additional interventions.

As children get older, they may face another daunting obstacle: gang violence. In El Salvador, for example, gang violence has caused an estimated 13 percent decrease in enrollment. Researchers tested out a relatively low-cost intervention in which they offered after-school programs to a random group of children. The program included activities like artistic performances as well as cognitive behavioral therapy to provide children with tools to help manage their behavior. The program proved to be highly effective: students completed more hours of homework, had more positive attitudes toward school, were less likely to miss days of school, and were less likely to engage in violence.

¡°Countries that are ready to invest in the human capital of their citizens don¡¯t need to invent strategies from scratch,¡± said Wagstaff. ¡°There is now plenty of research ready for prime time to help countries improve their stock of human capital.¡±