The Human Capital Model
TL;DR: In this article, a detailed treatment of the human capital model of the demand for health which was originally developed in 1972 is discussed, and theoretical extensions of the model are reviewed, as well as empirical research that tests the predictions and studies causality between years of formal schooling completed and good health is surveyed.
Abstract: This chapter contains a detailed treatment of the human capital model of the demand for health which was originally developed in 1972. Theoretical predictions are discussed, and theoretical extensions of the model are reviewed. Empirical research that tests the predictions of the model or studies causality between years of formal schooling completed and good health is surveyed. The model views health as a durable capital stock that yields an output of healthy time. Individuals inherit an initial amount of this stock that depreciates with age and can be increased by investment. The household production function model of consumer behavior is employed to account for the gap between health as an output and medical care as one of many inputs into its production. In this framework the “shadow price” of health depends on many variables besides the price of medical care. It is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education (years of formal schooling completed) if more educated people are more efficient producers of health. An important result is that, under certain conditions, an increase in the shadow price may simultaneously reduce the quantity of health demanded and increase the quantities of health inputs demanded.
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TL;DR: In this paper, the authors explored the link 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.
Abstract: 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.
1,417 citations
Posted Content•
TL;DR: In this article, the authors explore the connection between income inequality and health in both poor and rich countries and conclude that there is no direct link from income inequality to ill-health; individuals are no more likely to die if they live in more unequal places.
Abstract: I explore the connection between income inequality and health in both poor and rich countries. I discuss a range of mechanisms, including nonlinear income effects, credit restrictions, nutritional traps, public goods provision, and relative deprivation. I review the evidence on the effects of income inequality on the rate of decline of mortality over time, on geographical pattens of mortality, and on individual-level mortality. Much of the literature needs to be treated skeptically, if only because of the low quality of much of the data on income inequality. Although there are many puzzles that remain, I conclude that there is no direct link from income inequality to ill-health; individuals are no more likely to die if they live in more unequal places. The raw correlations that are sometimes found are likely the result of factors other than income inequality, some of which are intimately linked to broader notions of inequality and unfairness. That income inequality itself is not a health risk does not deny the importance for health of other inequalities, nor of the social environment. Whether income redistribution can improve population health does not depend on a direct effect of income inequality and remains an open question.
1,240 citations
TL;DR: The role of cognitive and noncognitive ability in shaping adult outcomes and the role of families in creating these abilities are discussed, as well as adverse trends in American families.
Abstract: American society is polarizing. Proportionately more American youth are graduating from college than ever before. At the same time, American-born youth are graduating from high school at lower rates than 40 years ago. This paper reviews and interprets these trends. The origins of inequality are examined and policies to alleviate it are analyzed. Families play a powerful role in shaping adult outcomes. The accident of birth is a major source of inequality. Recent research by Cunha and Heckman (2007a, 2008b) shows that about half of the inequality in the present value of lifetime earnings is due to factors determined by age 18. Compared to 50 years ago, relatively more American children are being born into disadvantaged families where investments in children are smaller than in advantaged families. Policies that supplement the child rearing resources available to disadvantaged families reduce inequality and raise productivity.
1,044 citations
Cites background or methods from "The Human Capital Model"
...In a proper overlapping generations model, as developed in Carneiro, Cunha, and Heckman (2003) and the website for Cunha and Heckman (2007b), investment in parents is modeled, explaining the intergenerational transmission of health, personality, and cognition....
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...Cunha, Heckman, and Schennach (2007) estimate the elasticity of substitution parameters for inputs at different periods that govern the trade-off of investment between the early years and the later years....
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...and Heckman (2003) formalize these concepts in an overlapping generations model....
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TL;DR: In this paper, the authors explore the connection between health and inequality in both poor and rich countries and conclude that there is no direct link from income inequality to mortality; individuals are no more likely to die or to report that they are in poor health if they live in places with a more unequal distribution of income.
Abstract: I explore the connection between health and inequality in both poor and rich countries. My primary focus is on the relationship between income inequality and mortality, but I also discuss the effects of inequalities in other, often more important, dimensions. I discuss a range of mechanisms, including nonlinear income effects, credit restrictions, nutritional traps, public goods provision, and relative deprivation. I review the evidence on the effects of income inequality on the rate of decline of mortality over time, on geographical pattens of mortality, and on individual-level mortality. Much of the literature, both theoretical and empirical, needs to be treated skeptically, if only because of the low quality of much of the data on income inequality. Although there are many remaining puzzles, I conclude that there is no direct link from income inequality to mortality; individuals are no more likely to die or to report that they are in poor health if they live in places with a more unequal distribution of income. The raw correlations that are sometimes found are likely the result of factors other than income inequality, some of which are intimately linked to broader notions of inequality and unfairness. That income inequality itself is not a health risk does not deny the importance for health of other inequalities, nor of the social environment. Whether income redistribution can improve population health does not depend on the existence of a direct link between income inequality and health and remains an open question.
928 citations
TL;DR: Demand barriers present in low- and middle-income countries and evidence on the effectiveness of interventions to overcome these obstacles are reviewed, suggesting that while barriers are plentiful, there is a dearth of evidence on ways to reduce them.
Abstract: Evidence suggests that demand-side barriers may be as important as supply factors in deterring patients from obtaining treatment. Yet relatively little attention is given, either by policy makers or researchers, to ways of minimizing their effect. These barriers are likely to be more important for the poor and other vulnerable groups, where the costs of access, lack of information and cultural barriers impede them from benefiting from public spending. Demand barriers present in low- and middle-income countries and evidence on the effectiveness of interventions to overcome these obstacles are reviewed. Demand barriers are also shown to be important in richer countries, particularly among vulnerable groups. This suggests that while barriers are plentiful, there is a dearth of evidence on ways to reduce them. Where evidence does exist, the data and methodology for evaluating effectiveness and cost-effectiveness is insufficient. An increased focus on obtaining robust evidence on effective interventions could yield high returns. The likely nature of the interventions means that pragmatic policy routes that go beyond the traditional boundaries of the public health sector are required for implementing the findings.
877 citations
References
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TL;DR: In this article, the null hypothesis of no misspecification was used to show that an asymptotically efficient estimator must have zero covariance with its difference from a consistent but asymptonically inefficient estimator, and specification tests for a number of model specifications in econometrics.
Abstract: Using the result that under the null hypothesis of no misspecification an asymptotically efficient estimator must have zero asymptotic covariance with its difference from a consistent but asymptotically inefficient estimator, specification tests are devised for a number of model specifications in econometrics. Local power is calculated for small departures from the null hypothesis. An instrumental variable test as well as tests for a time series cross section model and the simultaneous equation model are presented. An empirical model provides evidence that unobserved individual factors are present which are not orthogonal to the included right-hand-side variable in a common econometric specification of an individual wage equation.
16,198 citations
TL;DR: In this article, the authors extend activity analysis into consumption theory and assume that goods possess, or give rise to, multiple characteristics in fixed proportions and that it is these characteristics, not goods themselves, on which the consumer's preferences are exercised.
Abstract: Activity analysis is extended into consumption theory. It is assumed that goods possess, or give rise to, multiple characteristics in fixed proportions and that it is these characteristics, not goods themselves, on which the consumer’s preferences are exercised.
9,495 citations
Book•
01 May 1974
TL;DR: In this article, the authors analyzed the distribution of worker earnings across workers and over the working age as consequences of differential investments in human capital and developed the human capital earnings function, an econometric tool for assessing rates of return and other investment parameters.
Abstract: Analyzes the distribution of worker earnings across workers and over the working age as consequences of differential investments in human capital. The study also develops the human capital earnings function, an econometric tool for assessing rates of return and other investment parameters.
8,587 citations
8,129 citations