Relationships between life expectancy and per capita income in Indian states using second generation panel econometrics

Abstract

This study investigates the relationship between life expectancy (LE) and per capita income (PCI) across 16 major Indian states during 1991–2022. Both variables display steady upward trajectories, with Preston curves confirming their co-movement. Panel econometric analysis using the Westerlund error-correction cointegration test and the CS-ARDL model establishes a stable long-run equilibrium, showing that a one-year increase in LE raises PCI by approximately Rs. 1978.88 in the short-run and Rs. 3139.27 in the long-run. The negative and highly significant error-correction term (− 0.76) indicates rapid adjustment toward equilibrium, while Dumitrescu-Hurlin panel Granger causality tests confirm bidirectional causality between LE and PCI. To capture heterogeneity, the analysis divides the panel into two income-based subgroups. Results reveal that in higher-income states, LE significantly enhances PCI in both horizons, whereas no such effect is observed in lower-income states. These findings underscore the need for differentiated policy action: sustaining the virtuous cycle in richer states through advanced healthcare systems, preventive programs, and social protection, while in poorer states prioritizing equitable access to medical services, effective school-based nutrition programs, and strengthened primary healthcare networks supported by state-level monitoring of centrally sponsored schemes. These operational measures provide concrete pathways for translating longevity gains into inclusive and sustainable economic development across Indian states.