This paper estimates the long-term benefits from an influential early childhood program targeting disadvantaged families. The program was evaluated by random assignment and followed participants through their mid-30s. It has substantial beneficial impacts on health, children’s future labor incomes, crime, education, and mothers’ labor incomes, with greater monetized benefits for males. Lifetime returns are estimated by pooling multiple data sets using testable economic models. The overall rate of return is 13.7% per annum, and the benefit/cost ratio is 7.3. These estimates are robust to numerous sensitivity analyses.
The Life-Cycle Benefits of an Influential Early Childhood Program by Jorge Luis García, James J. Heckman, Duncan Ermini Leaf, María José Prados :: SSRNJanuary 18, 2017
Unfair Pay and Health by Falk Armin, Fabian Kosse, Ingo Menrath, Pablo Emilio Verde, Johannes Siegrist :: SSRNJanuary 6, 2017
This paper investigates physiological responses to perceptions of unfair pay. We use an integrated approach exploiting complementarities between controlled lab and representative panel data. In a simple principal-agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. Throughout the experiment we record agents’ heart rate variability, which is an indicator of stress-related impaired cardiac autonomic control, and which has been shown to predict coronary heart disease in the long-run. Our findings establish a link between unfair payment and heart rate variability. Building on these findings, we further test for potential adverse health effects of unfair pay using observational data from a large representative panel data set. Complementary to our experimental findings we show a strong and significant negative association between unfair pay and health outcomes, in particular cardiovascular health.
Start at birth, coordinate services into comprehensive early childhood programs and achieve greater economic and social gains. Professor Heckman’s latest research, “The Lifecycle Benefits of an Influential Early Childhood Program,” shows that high quality birth-to-five programs for disadvantaged children can deliver a 13% per year return on investment—a rate substantially higher than the 7-10% return previously established for preschool programs serving 3- to 4-year-olds. Heckman, his University of Chicago colleague Jorge Luis García, Duncan Ermini Leaf of the Leonard D. Schaeffer Center for Health Policy and Economics at University of Southern California, and María José Prados of the Dornsife Center for Economic and Social Research at University of Southern California, find that significant gains are realized through better outcomes in education, health, social behaviors and employment.
Individual Investments in Education and Health: Policy Responses and Interactions by Jared C. Carbone, Snorre Kverndokk :: SSRNDecember 10, 2016
Empirical studies show that years of schooling are positively correlated with good health. The implication may go from education to health, from health to education, or from factors that influence both variables. We formalize a model that determines an individual’s demand for knowledge and health based on the causal effects, and study the impacts on the individual’s decisions of policy instruments such as subsidies on medical care, subsidizing schooling, income tax reduction, lump sum transfers and improving health at young age. Our results indicate that income redistribution policies may be the best instrument to improve welfare, while a medical care subsidy is the best instrument for longevity. Subsidies to medical care or education would require large imperfections in these markets to be more welfare improving than distributional policies.
Savings after Retirement: A Survey by Mariacristina De Nardi, Eric French, John Bailey Jones :: SSRNDecember 7, 2016
The saving patterns of retired US households pose a challenge to the basic life-cycle model of saving. The observed patterns of out-of-pocket medical expenses, which rise quickly with age and income during retirement, and heterogeneous life span risk can explain a significant portion of US saving during retirement. However, more work is needed to distinguish these precautionary saving motives from other motives, such as the desire to leave bequests. Progress toward disentangling these motivations has been made by matching other features of the data, such as public and private insurance choices. An improved understanding of whether intended bequests left to children and spouses are due to altruism, risk sharing, exchange motivations, or a combination of these factors is an important direction for future research.
Explaining the Rise in Educational Gradients in Mortality by David M. Cutler, Fabian Lange, Ellen Meara, Seth Richards-Shubik, Christopher J. Ruhm :: SSRNDecember 6, 2016
The long-standing inverse relationship between education and mortality strengthened substantially later in the 20th century. This paper examines the reasons for this increase. We show that behavioral risk factors are not of primary importance. Smoking has declined more for the better educated, but not enough to explain the trend. Obesity has risen at similar rates across education groups, and control of blood pressure and cholesterol has increased fairly uniformly as well. Rather, our results show that the mortality returns to risk factors, and conditional on risk factors, the return to education, have grown over time.
Health Care Expenditure and Income: A Global Perspective by Badi H. Baltagi, Raffaele Lagravinese, Francesco Moscone, Elisa Tosetti :: SSRNDecember 6, 2016
This paper investigates the long-run economic relationship between health care expenditure and income in the world using data on 167 countries over the period 1995-2012, collected from the World Bank data set. The analysis is carried using panel data methods that allow one to account for unobserved heterogeneity, temporal persistence, and crosssection dependence in the form of either a common factor model or a spatial process. We estimate a global measure of income elasticity using all countries in the sample, and for sub-groups of countries, depending on their geo-political area and income. Our findings suggest that at the global level, health care is a necessity rather than a luxury. However, results vary greatly depending on the sub-sample analysed. Our findings seem to suggest that size of income elasticity depends on the position of different countries in the global income distribution, with poorer countries showing higher elasticity.