A positive correlation between health and economic prosperity has been widely documented, but the extent to which this reflects a causal effect of health on economic outcomes is very controversial. Two classes of evidence are examined. First, carefully designed random assignment studies in the laboratory and field provide compelling evidence that nutritional deficiency — particularly iron deficiency — reduces work capacity and, in some cases, work output. Confidence in these results is bolstered by a good understanding of the underlying biological mechanisms. Some random assignment studies indicate an improved yield from health services in the labour market. Second, observational studies suggest that general markers of nutritional status, such as height and body mass index (BMI), are significant predictors of economic success although their interpretation is confounded by the fact that they reflect influences from early childhood and family background. Energy intake and possibly the quality of the diet have also been found to be predictive of economic success in observational studies. However, the identification of causal pathways in these studies is difficult and involves statistical assumptions about unobserved heterogeneity that are difficult to test. Illustrations using survey data demonstrate the practical importance of this concern. Furthermore, failure to take into account the dynamic interplay between changes in health and economic status has led to limited progress being reported in the literature. A broadening of random assignment studies to measure the effects of an intervention on economic prosperity, investment in population-based longitudinal socioeconomic surveys, and application of emerging technologies for a better measure of health in these surveys will yield very high returns in improving our understanding of how health influences economic prosperity.