NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Healthy, Wealthy, and Wise


Child health is important not only for its own sake but also because it affects children's future prospects more broadly, as well as the prospects of their children.

Differences in education can explain a significant fraction of the variation in wages and incomes among adults, as well as the variation in many other positive outcomes. But what determines a child's educational success? Most studies point to family background as the number one factor. Children in higher income families are likely to get more education than other children, but why does income matter?

In Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development (NBER Working Paper No. 13987), author Janet Currie surveys the literature and focuses on two important questions: Do parental circumstances affect child health at early ages? And, does child health matter for future educational and labor market outcomes? The answer to both questions, she concludes, is "yes" -- which means that poor children are at a double disadvantage because they are most likely to be in poor health. For example, mental health problems are a particularly important determinant of longer-term outcomes, and 12 percent of poor children have been told that they have mental health problems, compared to about 8 percent of children who are not poor.

The evidence to date also "suggests that fetal health may be particularly important and hence that protecting the health of mothers may be one of the most effective ways to improve child health," Currie writes. For example, there is about a 3 percentage point gap -- 11.2 percent versus 8 percent -- between poor and non-poor children in the incidence of low birth weight, a common summary measure of fetal health.

In her analysis, Currie surveys a number of studies on the effect on child health and future economic status of the following conditions: fetal origins, birth weight, poor nutrition, mental health, chronic physical conditions, acute conditions, and toxic exposure. She notes that this research on the whole suggests that child health is important not only for its own sake but also because it affects children's future prospects more broadly, as well as the prospects of their children. For instance, she cites evidence taken from a study of California mothers who were sisters. In cases where one sister was low birth weight and the other was not, the low birth weight sister was 3 percent more likely to be living in a poor area and 3 percent less likely to be married at the time of the birth of her own child. Moreover, the children of low birth weight sisters were 6 percent more likely than their cousins to be low birth weight themselves.

"Investments in prevention may have a large payoff in terms of future human capital accumulation, but it is important to learn what types of investments are most effective," Currie writes. "Even if we find that health problems associated with low income have large causal effects on children's outcomes, this does not necessarily imply, for example, that a program of cash subsidies to parents is the most effective way to remediate the problem."

Prior research has argued that while many in-kind programs have effectively attacked the consequences of poverty for children, there is relatively little evidence that modest cash transfers have large effects. Even equalizing access to health care is not sufficient to eliminate gaps in health. Currie believes that we need to understand more about the reasons why poor children suffer a higher incidence of negative health events, even in utero, so that we can do more to prevent them.

-- Lester Picker


The Digest is not copyrighted and may be reproduced freely with appropriate attribution of source.
 
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