SOC POL 351 The Economics of Health, Human Capital, and Happiness School of Education and Social Policy Northwestern University Winter 2020
Course syllabus
Instructor: Hannes Schwandt Email: [email protected] Office: Annenberg 218
Teaching assistant: Timea Viragh Email: [email protected] Office: Annenberg 107
Where and when
Annenberg G02, Tuesday and Thursdays; 3:30pm-4:50pm
Course description
Understanding causal relationships is a central goal in social science and science in general. Correlations help to predict outcomes, but if we want to influence outcomes we need to understand causal pathways. It is not sufficient to observe what is happening, we need to know why it is happening.
Toolbox of causal inference
In this course students will learn the toolbox of causal inference econometrics with applications to the economics of health, human capital, and subjective wellbeing.
The empirical methods we will cover include multivariate regressions, panel data, difference-in- difference designs, instrumental variables, randomized control trials, and regression discontinuities. We will also discuss causal evidence derived from theoretical models and machine learning.
Health, human capital, and happiness as core applications
Health, human capital, and subjective wellbeing (“happiness”) are core dimensions of social welfare and inequality in our society. They matter as an outcome for people’s lives and they matter as an input into economic and social productivity. Moreover, health, human capital, and happiness are impacted by behaviors and by social and environmental conditions – factors that can be impacted via social policies. To develop effective social policies, however, it is crucial to understand the causal mechanisms driving these factors.
We will discuss fetal origins, the impact of air pollution on health, causes and consequences of mental illness in childhood and youth, the impact of income on health, trends in mortality, the economic drivers of fertility, happiness across countries and over time, and the roots of midlife crisis.
Prerequisites
Econ 202 (Intro to Microeconomics) and a 200-level statistics class (SESP 210, Stat 202, Stat 210 and Psych 201 are all suitable)
Website
The course webpage is on Canvas with the following course identifier: 020WI_SOC_POL_351-0_SEC20_AND_HDSP_451-0_SEC20
Grading
20% problem sets, 30% midterm, 50% final exam
Exam dates
Midterm: 2/11/2020 Final exam: 3/12/2020
Exam information
Both exams will be closed book (no notes, books, etc.). There is no scheduled make-up time for either exam. If you anticipate a potential medical emergency (e.g., you are due to give birth on the day of the final) please talk to me as soon as possible. Neither the midterm exam nor the final exam can be taken before the scheduled date. I reserve the right to give an alternative version of the exam in case a student takes the exam outside of the scheduled time slot.
Course material
Slides form the core material of the course are provided through the Canvas website. The slides often contain gaps to be completed during the lectures. Moreover, some additional concepts, discussions, or references may come up during the lectures. If you miss a class make sure to get lecture notes from a fellow student. The detailed course schedule (further below) lists papers and links that provide additional details to complement the material discussed in class.
Weekly required reading
References marked with an asterisk are obligatory to read before class – references from the methods sections need to read before the Tuesday lecture; references from the topics section need to be read before the Thursday lecture.
Problem sets
There will be seven graded problem sets. They are due at the beginning of the Tuesday lecture following the assignment. The overall problem set grade is based on your six best problem sets. Late problem sets are not accepted under any circumstances.
You are allowed and encouraged to work with your classmates on the problem sets. However, problem sets are typically individualized and you must hand in your own set of answers with explanations in your own words (no identical copies of joint work). If a problem requires coding or calculations, you must show your own work.
Statistical software
Students are encouraged to use Stata, however, other statistical packages such as R can be used as well. The TA will provide introductory material for Stata, and R, and will offer an introductory session during the first office hour (Friday 11am, 1/10/2020). If you want to use Stata (as recommended), you can use it for free via SESP’s remote desktop access. There are online tutorials from SESP IT, here is the one for Windows, and here for Mac.
Office hours
My office hours are on Thursdays 2:00pm-3:00pm in my office, and by appointment (set up through email).
The TA will also be holding office hours, on Fridays 11:00am-12:00pm in Annenberg 101. Course schedule
Week 1 – 1/7/2020 & 1/9/2020 Introduction Methods: Regression basics Topics: Models of health production
Week 2 – 1/14/2020 & 1/16/2020 Methods: Panel data, fixed effects Topics: Fetal origins
Week 3 – 1/21/2020 & 1/23/2020 Methods: Instrumental variables Topic: Wealth-health relationship (Guest lecture: Michelle Yin)
Week 4 – 1/28/2020 & 1/30/2020 Methods: Difference-in-Difference Topic: Pollution
Week 5 – 2/4/2020 & 2/6/2020 Methods: Randomized control trials Topic: The health impacts of health insurance
Week 6 – 2/11/2020 & 2/13/2020 2/11/2020: Midterm exam – in class 2/13/2020: Opioids (Guest lecture: Molly Schnell)
Week 7 – 2/18/2020 & 2/20/2020 Methods: Regression discontinuity Topic: Mental health
Week 8 – 2/25/2020 & 2/27/2020 Methods: Mortality and fertility measures; inequality measures Topic: Mortality inequality
Week 9 – 3/2/2020 & 3/5/2020 Methods: Empirical robustness and replicability (Timea Viragh) Topic: Fertility
Week 10 – 3/10/2020 & 3/12/2020 3/10/2020: Happiness 3/12/2020: Final exam – in class
4 Detailed course schedule with references
Week 1 – 1/7/2020 & 1/9/2020
Methods: Regression basics (multivariate regression, clustering, measurement error, binary dependent variables)
• Rubin, Donald B. (1974) "Estimating causal effects of treatments in randomized and nonrandomized studies." Journal of educational Psychology 66, no. 5: 688.
• * Angrist, J.D. and Pischke, J.S., 2009. Mostly harmless econometrics. Princeton University Press – Preface and Chapter 1
• Stock, J.H. and Watson, M.W., 2003. Introduction to econometrics (Vol. 104). Boston: Addison Wesley – Chapter 11 (binary dependent variables)
Topics: Models of health production
• Grossman, Michael (1972) “On the Concept of Health Capital and the Demand for Health,” Journal of Political Economy, 80(2), 223-255.
• Heckman, James J. (2007) "The economics, technology, and neuroscience of human capability formation." Proceedings of the National Academy of Sciences 104, no. 33: 13250-13255.
5 Week 2 – 1/14/2020 & 1/16/2020
Methods: Panel data, fixed effects
• Stock, J.H. and Watson, M.W., 2003. Introduction to econometrics (Vol. 104). Boston: Addison Wesley – Chapter 10
• Angrist, J.D. and Pischke, J.S., 2009. Mostly harmless econometrics. Princeton University Press, Chapter 5
Topics: Fetal origins
• * Almond, Douglas and Janet Currie, (2011). Killing me softly: The fetal origins hypothesis. Journal of Economic Perspectives, 25(3), 153-72.
• Almond, Douglas, Janet Currie, and Valentina Duque. "Childhood circumstances and adult outcomes: Act II." Journal of Economic Literature 56, no. 4 (2018): 1360-1446.
• Schwandt, H., 2017. The Lasting Legacy of Seasonal Influenza: In-Utero Exposure and Labor Market Outcomes. COHERE Discussion Papers, 5.
• Isen, A., Rossin-Slater, M. and Walker, W.R., 2017. Every breath you take—every dollar you’ll make: The long-term consequences of the clean air act of 1970. Journal of Political Economy, 125(3), pp.848-902.
6 Week 3 – 1/21/2020 & 1/23/2020
Methods: Instrumental variables
• Stock, J.H. and Watson, M.W., 2003. Introduction to econometrics (Vol. 104). Boston: Addison Wesley – Chapter 12
• Angrist, J.D. and Pischke, J.S., 2014. Mastering 'metrics: The path from cause to effect. Princeton University Press – Chapter 3.1-3.3
Topic: Wealth-health relationship (Guest lecture: Michelle Yin)
Additional references:
Individual Income
• Schwandt, Hannes. (2014) " Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations." CEP Discussion Paper No 1281 July 2014. • Smith, James P. (2005). 'Consequences and Predictors of New Health Events' in David Wise (Ed.) Advances in the Economics of Aging. University of Chicago Press, 2005. • Sullivan, Daniel and Till von Wachter (2009). 'Job Displacement and Mortality: An Analysis using Administrative Data' Quarterly Journal of Economics, 124(3), 1265-1306.
Aggregate income
• Deaton, Angus and Christina Paxson (2004). Mortality, income, and income inequality over time in Britain and the United States, in David Wise (Ed.), • Perspectives on the Economics of Aging. Chicago: University of Chicago Press, 247-279. • Miller, D.L., Page, M., Stevens, A.H., & Filipski, M. (2009). Are Recessions Really Good for your Health? Understanding Procyclical Mortality. American Economic Review Papers and Proceedings, May 99(2), 122-127. • Ruhm, Christopher. (2000) “Are Recessions Good for your Health?” Quarterly Journal of Economics, 115:2, 617-50.
Education
• Clark, Damon, and Heather Royer (2013) "The effect of education on adult mortality and health: Evidence from Britain." The American Economic Review 103, no. 6 (2013): 2087-2120. • Currie, Janet and Enrico Moretti (2003) “Mother’s Education and the Intergenerational Transmission of Human Capital: Evidence from College Openings,” Quarterly Journal of Economics, 1495-1532. • Lleras-Muney, Adriana (2005) “The Relationship between Education and Adult Mortality in the United States,” Review of Economic Studies, 1862-91. • Mazumder, B. (2008). “Does education improve health? A reexamination of the evidence from compulsory schooling laws.” Federal Reserve Bank of Chicago Economic Perspectives Q2: 2-16. • McCrary, Justin, and Heather Royer. 2011. "The Effect of Female Education on Fertility and Infant Health: Evidence from School Entry Policies Using Exact Date of Birth." American Economic Review, 101(1). • Oreopoulos, Philip (2007) "Do dropouts drop out too soon? Wealth, health and happiness from compulsory schooling." Journal of public Economics 91, no. 11: 2213-2229.
7 Health Behavior
• Cutler, David and Adriana Lleras-Muney. “Understanding Difference in Health Behavior by Education,” Journal of Health Economics, 29(1), January 2010, 1-28.
Nutrition
• Currie, Janet, Stephano Della Vigna, Enrico Moretti, Vikram Pathania. (2010) “The Effect of Fast Food Restaurants on Obesity and Weight Gain,” American Economic Journals: Economic Policy, August 2010, v2 #3. • Handbury, J., Rahkovsky, I. and Schnell, M., 2015. Is the focus on food deserts fruitless? Retail access and food purchases across the socioeconomic spectrum (No. w21126). National Bureau of Economic Research. • Allcott, H., Diamond, R., Dubé, J.P., Handbury, J., Rahkovsky, I. and Schnell, M., 2019. Food deserts and the causes of nutritional inequality. The Quarterly Journal of Economics, 134(4), pp.1793-1844.
Smoking and drinking
• de Walque, Damien. 2010. “Education, Information, and Smoking Decisions: Evidence from Smoking Histories in the United States, 1940–2000,” J. Human Resources 45:682-717. • Fertig, Angela R., and Tara Watson. (2009) "Minimum drinking age laws and infant health outcomes." Journal of Health Economics 28, no. 3: 737-747.
8 Week 4 – 1/28/2020 & 1/30/2020
Methods: Difference-in-Difference
• Angrist, J.D. and Pischke, J.S., 2014. Mastering 'metrics: The path from cause to effect. Princeton University Press. – Chapter 5
• Stock, J.H. and Watson, M.W., 2003. Introduction to econometrics (Vol. 104). Boston: Addison Wesley – Chapter 13.4
Topic: Pollution
• * (just the executive summary) Landrigan, P. J., Fuller, R., Acosta, N. J., Adeyi, O., Arnold, R., Baldé, A. B., ... & Chiles, T. (2018). The Lancet Commission on pollution and health. The Lancet, 391(10119), 462-512.
• Currie, J. and Walker, R., 2011. Traffic congestion and infant health: Evidence from E- ZPass. American Economic Journal: Applied Economics, 3(1), pp.65-90.
• Deschenes, O., Greenstone, M., & Shapiro, J. S. (2017). Defensive investments and the demand for air quality: Evidence from the NOx budget program. American Economic Review, 107(10), 2958-89.
• Alexander, D., & Schwandt, H. (2019). The Impact of Car Pollution on Infant and Child Health: Evidence from Emissions Cheating. Federal Reserve Bank of Chicago Working Paper
* watch: https://www.youtube.com/watch?v=9_B1I-i95FA (What did the Emissions Cheating Scandal Reveal about the Health Effects of Car Pollution?)
9 Week 5 – 2/4/2020 & 2/6/2020
Methods: Randomized control trials
• Duflo, Esther “Randomized Controlled Trials, Development Economics and Policy Making in Developing Countries” http://pubdocs.worldbank.org/en/394531465569503682/Esther-Duflo- PRESENTATION.pdf • * Deaton, Angus (2019) “Randomization in the tropics revisited: a theme and eleven variations. Randomized controlled trials in the field of development: a critical perspective.” Oxford University Press. https://www.princeton.edu/~deaton/downloads/Deaton%20Randomization%20revisited% 20v5%202019.pdf *watch:https://www.youtube.com/watch?time_continue=138&v=UB1A62u9fBE&featur e=emb_logo
Topic: The health impacts of health insurance
RCT evidence • Aron-Dine, A., Einav, L. and Finkelstein, A., 2013. The RAND health insurance experiment, three decades later. Journal of Economic Perspectives, 27(1), pp.197-222. • Finkelstein, A., Taubman, S., Wright, B., Bernstein, M., Gruber, J., Newhouse, J.P., Allen, H., Baicker, K. and Oregon Health Study Group, 2012. The Oregon health insurance experiment: evidence from the first year. The Quarterly journal of economics, 127(3), pp.1057-1106. • Sommers, B.D., Gawande, A.A. and Baicker, K., 2017. Health Insurance Coverage and Health-What the Recent Evidence Tells Us. The New England journal of medicine, 377(6), pp.586-593. • Goldin, J., Lurie, I.Z. and McCubbin, J., 2019. Health Insurance and Mortality: Experimental Evidence from Taxpayer Outreach (No. w26533). National Bureau of Economic Research.
Quasi-experimental evidence • Currie, J. and Gruber, J., 1996. Saving babies: The efficacy and cost of recent changes in the Medicaid eligibility of pregnant women. Journal of political Economy, 104(6), pp.1263-1296. • Goodman-Bacon, A., 2018. Public insurance and mortality: evidence from Medicaid implementation. Journal of Political Economy, 126(1), pp.216-262. • Wherry, L.R., Miller, S., Kaestner, R. and Meyer, B.D., 2018. Childhood Medicaid Coverage and Later-Life Health Care Utilization. Review of Economics and Statistics, 100(2), pp.287-302.
10 Week 6 – 2/11/2020 & 2/13/2020
Midterm exam – in class on 2/11/2020
Topic: Opioids (Molly Schnell)
• * Currie, J. and Schnell, M.K., 2018. A Closer Look at How the Opioid Epidemic Affects Employment. Harvard Business Review.
• * Doleac, J.L., Mukherjee, A. and Schnell, M.K., 2018. Research Roundup: What Does the Evidence Say About How to Fight the Opioid Epidemic?. Brookings Institute, December 2018
• Currie, J., Jin, J. and Schnell, M., 2019. US Employment and Opioids: Is There a Connection? In Health and Labor Markets (pp. 253-280). Emerald Publishing Limited.
• Schnell, M., 2018. Physician Behavior in the Presence of a Secondary Market: The Case of Prescription Opioids. mimeo
11 Week 7 – 2/18/2020 & 2/20/2020
Methods: Regression discontinuity
• Angrist, J.D. and Pischke, J.S., 2014. Mastering 'metrics: The path from cause to effect. Princeton University Press – Chapter 4
• Stock, J.H. and Watson, M.W., 2003. Introduction to econometrics (Vol. 104). Boston: Addison Wesley – Chapter 13.4
Topic: Mental health
• * Goodman, A., Joyce, R. and Smith, J.P., 2011. The long shadow cast by childhood physical and mental problems on adult life. Proceedings of the National Academy of Sciences, 108(15), pp.6032-6037.
• Bharadwaj, P., Pai, M.M. and Suziedelyte, A., 2017. Mental health stigma. Economics Letters, 159, pp.57-60.
• Case, Anne, and Angus Deaton. "Suicide, age, and wellbeing: an empirical investigation." In Insights in the Economics of Aging. University of Chicago Press, 2015.
• Currie, Janet and Mark Stabile. “Child Mental Health and Human Capital Accumulation: The Case of ADHD,” Journal of Health Economics, 25 #6, Nov. 2006, 1094-1118.
• Schwandt, H. and Wuppermann, A., 2016. The youngest get the pill: ADHD misdiagnosis in Germany, its regional correlates and international comparison. Labour Economics, 43, pp.72-86.
12 Week 8 – 2/25/2020 & 2/27/2020
Methods: Mortality and fertility measures
• Currie, J. and Schwandt, H., 2016. Mortality inequality: the good news from a county- level approach. Journal of Economic Perspectives, 30(2), pp.29-52.
Topic: Mortality inequality
• * Case, Anne, and Angus Deaton. (2015) "Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century." Proceedings of the National Academy of Sciences 112, no. 49: 15078-15083.
• Chetty, R. et al., (2015) “The Relationship between Life Expectancy and Income in the United States 2001-2014.” Update
* watch ”Executive Summary | Video” on https://healthinequality.org/documents/
• Currie, J. and Schwandt, H., 2016. Inequality in mortality decreased among the young while increasing for older adults, 1990–2010. Science, 352(6286), pp.708-712.
• Baker, M., Currie, J. and Schwandt, H., 2017. Mortality inequality in Canada and the US: Divergent or convergent trends? (No. w23514). National Bureau of Economic Research.
13 Week 9 – 3/2/2020 & 3/5/2020
Methods: Empirical robustness and replicability (lecture by Timea Viragh)
• References TBA
Topic: Fertility
• * Currie, Janet, and Hannes Schwandt. (2014) "Short-and long-term effects of unemployment on fertility." Proceedings of the National Academy of Sciences 111, no. 41 (2014): 14734-14739.
• Becker, Gary S. "An economic analysis of fertility." In Demographic and Economic Change in Developed Countries, pp. 209-240. Columbia University Press, 1960.
• Black, Dan A., Natalia Kolesnikova, Seth G. Sanders, and Lowell J. Taylor. "Are children “normal”?." The Review of Economics and Statistics 95, no. 1 (2013): 21-33.
• Brückner, Markus, and Hannes Schwandt. "Income and population growth." The Economic Journal 125, no. 589 (2015): 1653-1676.
• Dehejia, R., & Lleras-Muney, A. (2004). Booms, Busts, and Babies’ Health, Quarterly Journal of Economics, 119(3), 1091-1130.
• Schaller, Jessamyn. (2016) "Booms, Busts, and Fertility Testing the Becker Model Using Gender-Specific Labor Demand." Journal of Human Resources 51, no. 1: 1-29.
14 Week 10 – 3/10/2020 & 3/12/2020
Methods: Happiness measures
• Benjamin, D.J., Heffetz, O., Kimball, M.S. and Rees-Jones, A., 2012. What do you think would make you happier? What do you think you would choose?. American Economic Review, 102(5), pp.2083-2110.
• Benjamin, D.J., Heffetz, O., Kimball, M.S. and Rees-Jones, A., 2014. Can marginal rates of substitution be inferred from happiness data? Evidence from residency choices. American Economic Review, 104(11), pp.3498-3528.
• Ferrer-i-Carbonell, A. and P. Frijters. 2004. "How important is methodology for the estimates of the determinants of happiness?" Economic Journal 114:641-659.
• Fleurbaey, Marc and Hannes Schwandt. (2015). " Do People Seek to Maximize Their Subjective Well-Being – and Fail?" CEP Discussion Paper No 1391 November 2015.
Topic: Happiness across countries, over time, and over age (a.k.a. midlife crisis)
• * Deaton, A., 2018. What do self-reports of wellbeing say about life-cycle theory and policy? Journal of Public Economics, 162, pp.18-25.
• Deaton, Angus 2008. "Income, health and wellbeing around the world: Evidence from the Gallup World Poll." Journal of Economic Perspectives, 22(2), 53.
• Schwandt, Hannes (2015) "Why So Many of Us Experience a Midlife Crisis," Harvard Business Review, April 2015.
• Schwandt, Hannes (2016) "Unmet Aspirations as an Explanation for the Age U-shape in Wellbeing" Journal of Economic Behavior and Organization, Vol. 122: 75-87.
• Stevenson, Betsey, and Justin Wolfers. (2008) "Economic Growth and Subjective Well- Being: Reassessing the Easterlin Paradox." Brookings Papers.
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