When Institutions Heal: Formal and Informal Institutions in the Making of Population Health
- Prof Giorgia Marini
- 14 minutes ago
- 7 min read
A long-standing tradition in the socioeconomic literature emphasizes the positive relationship between socioeconomic status and health. Within this framework, population health is closely linked to key dimensions of socioeconomic status -- such as income, wealth, education, occupation, gender, and ethnicity -- so that individuals positioned lower in the social hierarchy tend to experience worse health outcomes than those located higher up. At the same time, a growing body of research has broadened this perspective by examining the role of institutions in shaping health outcomes. One of the most influential theoretical contributions in this area comes from Douglas North, who defines institutions as “the humanly devised constraints that structure political, economic, and social interaction.” From this standpoint, institutions encompass both formal institutions and informal institutions. Formal institutions include codified rules such as constitutions, laws, public policies, rights, and regulations enforced by official authorities, all of which can affect individual well-being. Informal institutions, by contrast, consist of unwritten norms of behaviour, social conventions, customs, and codes of conduct that influence how individuals think, act, and interact within society.
The way public administrations function, rules are enforced, and collective resources are managed, together with how individuals engage with others in family, friendship, and public spheres, can profoundly shape population health.
This perspective invites a shift in how we think about health systems. Instead of focusing solely on “how much” is spent or “how many” hospitals and doctors are available, it asks a more structural question: how well do institutions translate resources into effective care? How do socioeconomic, healthcare, and institutional factors interact to influence health outcomes?
Two studies, conducted at Sapienza University of Rome in 2024 and 2025, offer a compelling illustration of the role of institutions, both formal and informal, on Italian population’s health status, showing that institutional quality is not a background condition, but a central driver of health outcomes.
A Regional Health System, Twenty-One Institutional Realities
Italy provides an especially interesting case study. Its National Health Service is grounded in universalism and largely financed through general taxation. At the same time, since the early 1990s -- and even more decisively after the constitutional reform of 2001 -- healthcare governance has been deeply decentralised. Regions are responsible for organising, managing, and delivering services, within a national framework that defines a minimum and uniform set of services to be guaranteed everywhere in the country (aka Essential Levels of Care).
The result is a system that is formally unified but in practice fragmented. De facto, Italy hosts twenty-one regional health systems that differ markedly in administrative capacity, fiscal discipline, and policy effectiveness. Some regions consistently meet national standards and display strong performance across multiple dimensions of health. Others struggle with persistent deficits, inefficient service provision, and limited institutional credibility, often operating under strict financial recovery plans imposed by the central government. These differences are not merely administrative details. They translate into concrete variations in access to care, continuity of services, and ultimately, population health (see Figure 1).
Institutions as Health Producers
What does “institutional quality” mean in this context? It is not an abstract concept, but a measurable set of characteristics that describe how public authority is exercised. These include government effectiveness (the ability to design and implement sound policies), adherence to the rule of law, control of corruption, administrative efficiency, and the provision of public goods that indirectly affect health, such as environmental quality and waste management. Regions scoring higher on these dimensions also achieve better health outcomes, even when controlling for income levels, education, demographic structure, and healthcare resources. In other words, institutional quality is strongly and independently associated with population health (Figure 2).
Social Capital: The Invisible Infrastructure
Institutional quality does not operate in isolation. It interacts with social capital -- the networks of trust, cooperation, and civic participation that shape how societies function. When examined at the regional level, social capital emerges as a significant correlate of health outcomes, particularly for indicators related to longevity and mortality. Regions characterised by higher levels of civic engagement, social participation, and interpersonal trust tend to exhibit better health outcomes, even after accounting for economic and healthcare variables. This suggests that social capital acts as an informal complement to formal institutions, facilitating information flows, supporting collective action, and enhancing the effectiveness of public policies (figure 3).
Rethinking Healthcare Resources
Traditional debates about health policy often revolve around the quantity of resources: how much is spent, how many hospital beds are available, how many doctors are employed. While these factors matter, the Italian evidence highlights a more nuanced reality. In some contexts, higher hospital capacity is associated with worse health outcomes, including higher mortality. This counterintuitive finding can be explained by inefficiencies in resource allocation and by the lack of complementarity between physical infrastructure and human resources.
Increasing the number of beds without a corresponding investment in skilled personnel and organizational quality may encourage inappropriate or excessive use of hospital services, ultimately undermining care quality. Once again, institutions play a mediating role. Where governance is strong, resources are more likely to be integrated effectively into coherent care pathways. Where institutions are weak, even substantial investments may fail to produce the desired health benefits.
Health Inequality as an Institutional Issue
One of the most important implications of this body of evidence is that health inequality should be understood not only as a socioeconomic problem, but also as an institutional one. Differences in income, education, and employment certainly matter, but their impact on health is filtered through the quality of public institutions and the density of social relationships within which individuals are embedded.
In regions where institutions are capable, transparent, and accountable, socioeconomic disparities translate less directly into health disparities. Public healthcare services function as true equalizers, reducing the influence of individual background on health outcomes. At the same time, higher levels of social capital --expressed through strong family and friendship ties, civic participation, trust, and shared norms -- reinforce these institutional effects by facilitating access to services, disseminating health-related information, and supporting healthier behaviours. In such contexts, institutional effectiveness and social cohesion operate in a complementary way, jointly buffering the health risks associated with socioeconomic disadvantage.
Where institutions are fragile, by contrast, inequalities are amplified rather than mitigated. Weak administrative capacity, limited accountability, and uneven service provision reduce the ability of public healthcare systems to compensate for social and economic gaps. In these same regions, lower levels of social capital further exacerbate health inequalities: weaker interpersonal networks and lower trust constrain mutual support, hinder access to care, and reduce collective capacity to respond to health needs. As a result, socioeconomic disadvantages are more likely to translate into persistent and cumulative health penalties.
This reframing has significant policy consequences. It suggests that reducing health inequalities requires more than targeted health interventions or increased spending. It requires sustained investment in institutional capacity -- such as training public administrators, improving regulatory frameworks, enhancing accountability, and fostering coordination across levels of government-- alongside policies that strengthen social capital by promoting civic engagement, volunteering, and inclusive community spaces. Without attention to both dimensions, health policies risk addressing symptoms rather than underlying structural drivers of inequality.
Investing Where It Matters Most
If institutions and social capital matter for health, then improving health outcomes requires investing where both are weakest. This does not necessarily mean spending more on healthcare in the narrow sense. It means strengthening the human, organizational, and social foundations that allow health systems to function effectively and equitably.
Such investments include not only administrative reforms and managerial capacity-building, but also initiatives that nurture social connections --particularly in disadvantaged areas where isolation, low trust, and limited civic participation are more prevalent. Strengthening social capital can enhance the effectiveness of healthcare provision by supporting prevention, improving adherence to treatments, and reducing reliance on costly emergency care.
These investments are slow, complex, and often politically less visible than building hospitals or purchasing new technologies. Yet their long-term returns may be substantial. By improving institutional quality and reinforcing social capital, societies can enhance population health, reduce inequalities, and make better use of existing resources.
In this sense, institutions and social capital can be seen as complementary forms of preventive medicine: largely invisible when they work well, but acutely felt when they fail.
Concluding Perspective
Health is not produced by healthcare systems alone. It emerges from a broader institutional ecosystem that shapes how resources are allocated, how policies are implemented, and how citizens interact with one another and with public services. The Italian evidence makes this clear: where institutions are effective and social capital is strong, health improves, and inequalities shrink; where both are weak, even well-designed systems struggle to deliver.
Recognizing formal and informal institutions as a central determinant of health opens new avenues for research and policy. It challenges us to rethink what it means to invest in health and to acknowledge that, sometimes, the most powerful health interventions begin far from hospitals and clinics, in the everyday workings of public institutions and in the strength of social ties that bind communities together.
References
Antonelli MA, Marini G. Assessing the Link Between Social Capital and Health Outcomes in the Italian Regions: An Empirical Analysis. 2025. Annals of Public and Cooperative Economics. DOI: 10.1111/apce.70027
Antonelli MA, Marini G. Do institutions matter for citizens’ health status? Empirical evidence from Italy. 2024. European Journal of Health Economics, DOI: 10.1007/s10198-024-01689-9
