Childhood Circumstances and Adult Outcomes: Act Ii
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NBER WORKING PAPER SERIES CHILDHOOD CIRCUMSTANCES AND ADULT OUTCOMES: ACT II Douglas Almond Janet Currie Valentina Duque Working Paper 23017 http://www.nber.org/papers/w23017 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2017 We thank Steven Durlauf and five anonymous referees for very helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Almond thanks NSF award SES-1357608. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w23017.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2017 by Douglas Almond, Janet Currie, and Valentina Duque. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Childhood Circumstances and Adult Outcomes: Act II Douglas Almond, Janet Currie, and Valentina Duque NBER Working Paper No. 23017 January 2017 JEL No. H4,I14 ABSTRACT That prenatal events can have life-long consequences is now well established. Nevertheless, research on the Fetal Origins Hypothesis is flourishing and has expanded to include the early childhood (postnatal) environment. Why does this literature have a “second act?” We summarize the major themes and contributions driving the empirical literature since our 2011 reviews, and try to interpret the literature in light of an overarching conceptual framework about how human capital is produced early in life. One major finding is that relatively mild shocks in early life can have substantial negative impacts, but that the effects are often heterogeneous reflecting differences in child endowments, budget constraints, and production technologies. Moreover, shocks, investments, and interventions can interact in complex ways that are only beginning to be understood. Many advances in our knowledge are due to increasing accessibility of comprehensive administrative data that allow events in early life to be linked to long-term outcomes. Yet, we still know relatively little about the interval between, and thus about whether it would be feasible to identify and intervene with affected individuals at some point between early life and adulthood. We do know enough, however, to be able to identify some interventions that hold promise for improving child outcomes in early life and throughout the life course. Douglas Almond Valentina Duque Department of Economics University of Michigan Columbia University Postdoctoral Fellow in the International Affairs Building, MC 3308 Population Studies Center and 420 West 118th Street Department of Economics New York, NY 10027 426 Thompson Street and NBER Room 2034 [email protected] Ann Arbor, MI 48104 [email protected] Janet Currie Department of Economics Center for Health and Wellbeing 185A Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 and NBER [email protected] The fetal origins literature has been particularly active over the last several years rendering reviews by Currie (2009) and Almond and Currie (2011a, b) somewhat dated. Figure 1 shows the number of papers about “fetal origins” in several leading journals by year.1 Why does this literature “have legs"? By now, the rudimentary point is familiar. Currie and Hyson (1999) using longitudinal data showed that long-term outcomes seemed to respond to circumstances in utero; Costa (2000) found that chronic health conditions among older men were predicted by early-life infant mortality rates in their natal areas, which can proxy for the disease environment. Papers exploiting natural experiments to show the long-term impact of fetal and !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1 Figure 1 shows the number of annual publications from January 1993 to October 2015 in the Quarterly Journal of Economics, American Economic Review, Journal of Political Economy, Econometrica, Review of Economic Studies, Journal of Labor Economics, Journal of Econometrics, Journal of the European Economic Association, Review of Economics and Statistics, Journal of Human Resources, Journal of Public Economics, American Economic Journal: Applied Economics, Journal of Development Economics, American Economic Journal: Economic Policy, and Journal of Health Economics. 2 ! ! early life shocks such as Almond (2006), Van Den Berg et al. (2006), and Bleakley (2007), are a decade old. One reason for continued interest is that the large magnitude of the fetal origins effects that have been found, and the short time interval in utero suggest that in principle, Pareto improvements can be made by re-allocating resources from later to earlier in the life cycle. Given the common definition of economics as the study of the allocation of scarce resources (e.g., Blackhouse and Medema, 2009), this literature resonates with a core interest of economists: efficiency. Of course, the separation in time and across people (first the mother then the child) makes it far from obvious how this potentially high-return reallocation of resources can best be achieved. A second reason for enduring interest in the Fetal Origins Hypothesis (FOH) is that it has proven to describe a surprisingly general phenomenon. Although FOH was first formulated as a specific theory about the effects of prenatal nutritional deprivation on chronic health conditions in adulthood (Barker, 1998), economists have found that a wide range of early life experiences matter and that many other (non-health) outcomes are affected. Outcomes of surpassing interest to economists, including IQ and wages, have been linked to early life influences, as have some newer areas of focus such as personality traits. This evolving discovery speaks to another area of abiding interest for economics: the debate about nature versus nurture. It has become increasingly clear that we are shaped by many occurrences in early life which interact with our genetic endowments to either help or hinder us in reaching our potential and/or adapting to our environment (Manski, 2011). The FOH literature suggests that it may be possible to respond to entrenched disadvantage by altering the 3 ! ! environment in a way that promotes economic equality (Currie, 2011). Thus, the FOH remains important because it suggests that it may be possible to counter-balance forces leading to greater inequality (such as skill biased technical change) with investments in pregnant women, children, and their environments broadly defined.2 In addition to surveying studies that focus on shocks that occur while the child is in utero, this review considers shocks in early childhood. Angrist and Pischke (2010) herald a “credibility revolution” in which clear a priori definitions of treatment and control groups combined with time-series variation in environmental conditions help to generate sharp predictions. The FOH hypothesis lends itself to “severe tests” (Dinardo, 2007) given that the in utero period is very well defined, and children subjected to an external shock in utero can often be compared to similar children born a little earlier or later, who escaeped the shock. The beginning and ending dates of the period of “early childhood” are less well defined than the period in utero making it somewhat more difficult to find clean “natural experiments.” It is nevertheless possible to employ compelling identification strategies and we feel the majority of papers discussed in this review employ compelling research designs. In view of the large number of relevant studies, we organize the review around a series of “handbook” style tables that we present in the supplemental file (which can be found using the link in the abstract page). In lyric opera fashion, the tables briefly summarize each study’s highlights. We also report the datasets used, sample sizes, the empirical strategy employed, main results obtained, and any heterogeneity by subgroup in the tables. We have also tried to express ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2!In describing “Six examples of the Long-term Benefits of Anti-Poverty Programs”, the White House’s Council of Economic Advisers summarized recent research in this literature by economists, noting: Economists have traditionally argued that anti-poverty policy faces a “great tradeoff” — famously articulated by Arthur Okun — between equity and efficiency. Yet, recent work suggests that Okun’s famous tradeoff may be far smaller in practice nth tra aditionally believed and in ! many cases precisely the opposite could be the case. ! 4 the main effects both as a percent with respect to the outcome mean (when the outcome mean was provided in the paper) and in terms of a standard deviation (when the outcome’s standard deviation was provided). To some extent, reporting estimates in % and in SD facilitates the comparison of the effects across studies when these focus on a similar outcome (e.g., test scores). Consistent with the broader trend in economics, many of these papers pay particular attention to the use of large-scale administrative datasets. Beyond reducing measurement error and recording additional outcomes, the use of administrative data can help mitigate problems of selective attrition from surveys