The objective of this paper could be phrased as follows: Whatare the health consequences of changes in public fiscal and incomepolicies? This is an important question, especially in times whereprogrammes of macroeconomic structural adjustments are being implementedin many developing countries. The health consequences of these policiescontinue to be debated. Some argue that the main victims are mainly thepoor and the vulnerable [cf. Cornia et al. (1987) and (1988)]. Othersmaintain that the longer term benefits will more than compensate forshort-term losses and that the real test is to compare with theconsequences of not making the adjustments. The conceptual and empiricalfoundation of the debate seems to be less than satisfactory, however. Itis our view that to understand the health consequences of such policiesa careful examination of three issues are required: (a) the existingpattern of disease; (b) the initial distributional structure (equitypattern) of public policies; and (c) the behavioural response ofhouseholds in allocating resources towards health-promoting activitiesgiven (a) and (b). Our approach is necessarily context specific. It isin line with Streeten’s (1988) conclusion that ….. the most importantgeneral lesson that emerged was that there are no general lessons, andthat each case has to be treated separately and on its merits”. Ourpurpose is to provide an overall general framework that serves as aguide to examine specific cases. For more detailed theoretical analysis,see Diop (1990), and for an empirical application, see Diop andSirageldin (1990).