A common approach to evaluating robustness to omitted variable bias is to observe coefficient movements after inclusion of controls. This is informative only if selection on observables is informative about selection on unobservables. Although this link is known in theory in existing literature, very few empirical articles approach this formally. I develop an extension of the theory that connects bias explicitly to coefficient stability. I show that it is necessary to take into account coefficient and R-squared movements. I develop a formal bounding argument. I show two validation exercises and discuss application to the economics literature. Supplementary materials for this article are available online.

/pdf/unobservable-selection-and-coefficient-stability-theory-and-1r9lpwnnl2.pdf

Unobservable Selection and Coefficient Stability: Theory and Evidence

We use administrative records on the incomes of more than 40 million children and their parents to describe three features of intergenerational mobility in the United States. First, we characterize the joint distribution of parent and child income at the national level. The conditional expectation of child income given parent income is linear in percentile ranks. On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child’s income. Second, intergenerational mobility varies substantially across areas within the U.S. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. Third, we explore the factors correlated with upward mobility. High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability. While our descriptive analysis does not identify the causal mechanisms that determine upward mobility, the publicly available statistics on intergenerational mobility developed here can facilitate research on such mechanisms. The opinions expressed in this paper are those of the authors alone and do not necessarily reect

/pdf/where-is-the-land-of-opportunity-the-geography-of-1bm490jalj.pdf

Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States*

There are many possible pathways between parental education, income, and health, and between child health and education, but only some of them have been explored in the literature. This essay focuses on links between parental socioeconomic status (as measured by education, income, occupation, or in some cases area of residence) and child health, and between child health and adult education or income. Specifically, I ask two questions: What is the evidence regarding whether parental socioeconomic status affects child health? And, what is the evidence relating child health to future educational and labor market outcomes? I show that there is now strong evidence of both links, suggesting that health could play a role in the intergenerational transmission of economic status.

/pdf/healthy-wealthy-and-wise-socioeconomic-status-poor-health-in-1x6ojp6z8r.pdf

Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development

In the epidemiological literature, the fetal origins hypothesis associated with David J. Barker posits that chronic, degenerative conditions of adult health, including heart disease and type 2 diabetes, may be triggered by circumstance decades earlier, in utero nutrition in particular. Economists have expanded on this hypothesis, investigating a broader range of fetal shocks and circumstances and have found a wealth of later-life impacts on outcomes including test scores, educational attainment, and income, along with health. In the process, they have provided some of the most credible observational evidence in support of the hypothesis. The magnitude of the impacts is generally large. Thus, the fetal origins hypothesis has not only survived contact with economics, but has flourished.

/pdf/killing-me-softly-the-fetal-origins-hypothesis-3b7mkniv72.pdf

Killing Me Softly: The Fetal Origins Hypothesis.

This paper uses the 1918 influenza pandemic as a natural experiment for testing the fetal origins hypothesis. The pandemic arrived unexpectedly in the fall of 1918 and had largely subsided by January 1919, generating sharp predictions for long‐term effects. Data from the 1960–80 decennial U.S. Census indicate that cohorts in utero during the pandemic displayed reduced educational attainment, increased rates of physical disability, lower income, lower socioeconomic status, and higher transfer payments compared with other birth cohorts. These results indicate that investments in fetal health can increase human capital.

/pdf/is-the-1918-influenza-pandemic-over-long-term-effects-of-in-3d6v4weoop.pdf

Is the 1918 Influenza Pandemic Over? Long‐Term Effects of In Utero Influenza Exposure in the Post‐1940 U.S. Population

Previous studies, relying on short-term averages of fathers' earnings, have estimated the intergenerational elasticity (IGE) in earnings to be approximately 0.4. Due to persistent transitory fluctuations, these estimates have been biased down by approximately 30% or more. Using administrative data containing the earnings histories of parents and children, the IGE is estimated to be around 0.6. This suggests that the United States is substantially less mobile than previous research indicated. Estimates of intergenerational mobility are significantly lower for families with little or no wealth, offering empirical support for theoretical models that predict differences due to borrowing constraints.

Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data

This paper uses the Islamic holy month of Ramadan as a natural experiment in diurnal fasting and fetal health. Among births to Arab parents in Michigan, we find prenatal exposure to Ramadan results in lower birth weight. Exposure in the first month of gestation also reduces the number of male births. Turning to long-term "fetal origins" effects, we find Muslims in Uganda and Iraq are 20 percent more likely to be disabled as adults if early pregnancy overlapped with Ramadan. Estimated effects are larger for mental (or learning) disabilities. Our results suggest that relatively mild prenatal exposures can have persistent effects. (JEL I12, J16, O15, O17, Z12 )

/pdf/health-capital-and-the-prenatal-environment-the-effect-of-46x1euhrwu.pdf

Health Capital and the Prenatal Environment: The Effect of Ramadan Observance during Pregnancy

We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined. The first example refers to consumers who transfer the entire balance from an existing credit card account to a new account, but use the new card for convenience transactions, resulting in higher interest charges. The second example refers to consumers who face higher APRs because they inaccurately estimate their property value on a home equity loan or line of credit application. We match individuals from the US military for whom we have detailed test scores from the Armed Services Vocational Aptitude Battery test (ASVAB), to administrative datasets of retail credit from a large financial institution. We show that our matched samples are reasonably representative of the universes from which they are drawn. We find that consumers with higher overall composite test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake later in life. These mistakes are generally not associated with the non-mathematical component scores. We also conduct some complementary analyses using two other data sources. We use the National Longitudinal Survey of Youth (NLSY) to show that higher ASVAB math scores are associated with lower subjective discount rates. Finally, we use the Health and Retirement Survey (HRS) to demonstrate that particular forms of cognitive ability matter for specific types of suboptimal behavior. We find that the mathematical component of the test is what matters most for financial decision making and financial wealth. In contrast, non-mathematical aptitudes appear to matter for non-financial forms of suboptimal behavior (e.g. failure to take medicine). The HRS results also demonstrate the large ramifications of low math ability on long-term economic success.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1797785_code352406.pdf?abstractid=1651312&mirid=1&type=2

Cognitive Abilities and Household Financial Decision Making

The fetal-origins hypothesis has recently achieved “textbook” status in medicine (see Colin D. Rudolph and Abraham M. Rudolph, 2003; David A. Warrell et al., 2003) and is drawing increasing attention from social scientists (e.g., Anne Case et al., 2005; Janet Currie and Enrico Moretti, 2005). The hypothesis holds that disruptions to fetal nutrition can exert persistent effects on subsequent health. From the perspective of a health production function, determinants of health may be divided into (i) post-birth health investments (e.g., Medicare) and (ii) the initial health endowment. The fetalorigins hypothesis emphasizes the importance of the initial health endowment, often proxied with birth weight, in determining adult health. Despite growing acceptance of the fetal-origins hypothesis by physicians and epidemiologists, the physiologic mechanisms by which fetal damage exerts long-term effects are relatively poorly understood. Experimental evidence from animal studies has established that maternal nutrition has a causal effect on subsequent health. Still, researchers have questioned the causality of statistical associations drawn from human populationbased studies of size at birth and subsequent health (e.g., Kathleen M. Rasmussen, 2001). A particular concern is whether omitted factors might bias or even account for the positive correlations between measures of early-life and adult health. Recent research has used the 1918 Influenza Pandemic as a natural experiment for studying the effects of fetal health (Almond, 2003). In contrast to typical influenza strains, the 1918 virus disproportionately affected young adults: approximately one-third of pregnant women contracted the debilitating virus. The Pandemic arrived without warning and was highly concentrated between October 1918 and January 1919. As a result, the long-term damage predicted by the fetal-origins hypothesis is similarly concentrated. Approximately two-thirds of those in utero during the height of the Pandemic would have been born in the first six months of 1919. In order to bias estimates of long-term fetal effects, post-birth health investments would have to behave in the same abrupt manner as the Pandemic. Using Decennial Census data for 1960–1980, Almond (2003) found that cohorts in utero during the height of the Pandemic displayed reduced educational attainment, increased rates of disability, lower income, and lower socioeconomic status. However, the absence of specific health outcomes in the Census precludes identification of physiologic pathways and therefore limits the relevance of the findings for physicians and epidemiologists. Using data from the Survey of Income and Program Participation (SIPP), this study finds that cohorts in utero during the Pandemic exhibit impaired health outcomes relative to cohorts born a few months earlier or later. That these patterns are manifest 65–80 years after the Pandemic suggests that changes to fetal health can have life-long effects.

The 1918 Influenza Pandemic and Subsequent Health Outcomes: An Analysis of SIPP Data.

We estimate trends in intergenerational economic mobility by matching men in the Census to synthetic parents in the prior generation. We find that mobility increased from 1950 to 1980 but has declined sharply since 1980. While our estimator places greater weight on location effects than the standard intergenerational coefficient, the size of the bias appears to be small. Our preferred results suggest that earnings are regressing to the mean more slowly now than at any time since World War II, causing economic differences between families to become more persistent. However, current rates of positional mobility appear historically normal.

/pdf/intergenerational-economic-mobility-in-the-united-states-102tfmkgu6.pdf

Bhashkar Mazumder

Papers

Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data

Health Capital and the Prenatal Environment: The Effect of Ramadan Observance during Pregnancy

Cognitive Abilities and Household Financial Decision Making

The 1918 Influenza Pandemic and Subsequent Health Outcomes: An Analysis of SIPP Data.

Intergenerational Economic Mobility in the United States, 1940 to 2000