Heterogeneity, State Dependence and Health

In this paper, we use longitudinal data on Self-Reported Health Status from the Panel Study of Income Dynamics to estimate a model of the evolution of health over the life-cycle. The model allows for two sources of persistence in health: unobserved heterogeneity, which models an individual’s (unobserved) ability to cope with health shocks, and state dependence, which models the extent to which the ability to cope with health shocks depends on health status. We allow for flexibility in both sources of persistence. Estimation indicates that heterogeneity is an important determinant of health suggesting that a person’s health today has important antecedents earlier on in life. We also find evidence of state dependence. However, its magnitude depends crucially on the individual’s age and unobserved heterogeneity. The relative contributions of heterogeneity and state dependence that we uncover have different implications for how health policy should be conducted.health, dynamic panel data models, gradient

Heterogeneity, State Dependence and Health

This paper investigates the evolution of health over the life-cycle using the Panel Study of Income Dynamics. We allow for two sources of persistence: unobserved heterogeneity and state dependence. The former is modeled by discrete “types.” Estimation indicates that there are at least four types suggesting that there is a large degree of heterogeneity governing health dynamics. We find that the degree of state dependence is near unity for over half of the population. The implications of these findings are twofold. First, health inequalities in adulthood have antecedents in childhood. Second, policies that improve health care and its delivery may be an effective means of mitigating the gradient.Health, Dynamic Panel Data Models, Gradient

Selective Migration and Health

We investigate the proposition that the health of migrants does not constitute a random sample of the health of the sending region using data from the Panel Study of Income Dynamics on internal migration within the United States. Panel data is crucial, as it enables us to observe geographic mobility as well as the health of the migrant prior to migration. We find that, for men and women below 60 years of age, a move from the middle to the bottom of the health distribution reduces mobility by 32-40% and 12-18%, respectively. Nonrandom attrition from the panel implies that these estimates are lower bounds. By contrast, we find evidence that, among older people, there is higher mobility at the top and bottom of the health distribution than there is at the middle. We consider two explanations for this: first that elderly persons may migrate to be closer to a family network once they fall ill, and second that non-random attrition may also be causing an upwards bias in the estimated effect of illness on mobility.Migration, Health, Selection, Attrition

Identifying Endogenous Peer Effects in the Spread of Obesity

Recent research in the New England Journal of Medicine (NEJM) purports to show the existence of peer effects in the spread of obesity. Using a dataset of 5124 residents from Framingham, Massachusetts spanning the years 1971 to 2003, the authors show correlations between own weight gain and friends’ and relatives’ weight gain over this period. They find, furthermore, that these results are strongest for males and weaker for females. We use the Adolescent Health Survey, a nationally representative dataset of seventh through twelfth graders in 1994 and 1996 to examine the effect of peers on weight gain. Despite the differences in the samples, we are able to replicate the pattern of results in the NEJM study. However the results are not robust to alternative definitions of the outcome variable. Furthermore, due to the various identification issues that are unresolved in both this and the NEJM paper, we conclude that the evidence for contagion effects in the spread of obesity is only suggestive at best.Peer effects, obesity, adolescent health

Bad Apples, Goody Two Shoes and Average Joes: The Role of Peer Group Definitions in Estimation of Peer Effects

The potential influence of peers and social networks on individual outcomes is important to a variety of educational policy debates including school vouchers, special education, middle school grade configurations and tracking. Researchers usually address the identification problems associated with credibly estimating peer effects in these settings but often do not account for ad-hoc definitions of peer-groups. In this paper, we use extensive information on peer groups to demonstrate that accurate definitions of the peer network seriously impact estimation of peer effects. We estimate the effect of peers’ smoking, drinking, sexual behavior and educational achievement on a teen’s propensity to engage in like-minded behavior and address the major identification problems that plague estimation of these effects.Peer Effects, Education, Adolescent Health

Health Inequality over the Life-Cycle

We investigate the evolution of health inequality over the life-course. Health is modeled as a latent variable that is determined by three factors: endowments, and permanent and transitory shocks. We employ Simulated Minimum Distance and the Panel Study of Income Dynamics to estimate the model. We estimate that permanent shocks account for under 10% of the total variation in health for the colleged educated, but between 35% and 70% of total health variability for people without college degrees. Consistent with this, we find that health inequality moves substantially more slowly over the life-course for the college educated.health, dynamic panel data models, variance decomposition

Testing for State Dependence with Time-Variant Transition Probabilities

We consider the identification of state dependence in a dynamic Logit model with timevariant transition probabilities and an arbitrary distribution of the unobserved heterogeneity. We derive a simple result that allows us to test for the presence of state dependence in this model. Monte Carlo evidence suggests that this test has desirable properties even when there are some violations of the model’s assumptions. We also consider alternative tests for state dependence that will have desirable properties only when the transition probabilities do not depend on time and provide evidence that there is an "acceptable" range in which ignoring time-dependence does not matter too much. We conclude with an application to the Barker Hypothesis.Dynamic Panel Data Models, State Dependence, Health

Migration, Risk and the Intra-Household Allocation of Labor in El Salvador

We use panel data from El Salvador to investigate the intra-household allocation of labor as a risk-coping strategy. We show that adverse agricultural productivity shocks primarily increased male migration to the US with much smaller effects on female migration. This is consistent with the observation that the bulk of households allocated no women to the agricultural sector. These shocks also increased the number of hours that the household devoted to agricultural activities. These results do not contradict each other if one considers the possibility that the shocks had non-monotonic effects on shadow wages during the survey period. In contrast, damage sustained from the 2001 earthquakes exclusively stunted female migration. We argue that the reasons for this were that the earthquakes increased the demand for home production and that most men in our data are not engaged in domestic production at all.Migration, Labor Supply, Insurance, Intra-Household Allocation

Income Risk and Health

We investigate the impact of exogenous income shocks on health using twenty years of data from the Panel Study of Income Dynamics. To unravel the impact of income on health from unobserved heterogeneity and reverse causality, we employ techniques from the literature on the estimation of dynamic panel data models. Contrary to much of the previous literature on the gradient, we find that, on average, adverse income shocks lead to a deterioration of health. These effects are most pronounced for working-aged men and are dominated by transitions into the very bottom of the earnings distribution. We also provide suggestive evidence of an association between negative income shocks and higher mortality for working-aged men.Gradient, Health, Dynamic Panel Data Models, Recessions

Migration, Risk and the Intra-Household Allocation of Labor in El Salvador

We investigate how the gender composition of migrant flows and the intra-household allocation of labor are employed as risk-coping strategies in El Salvador. We show that agricultural productivity shocks primarily increased male migration to the US and, at the same time, increased the number of hours that the household devoted to agricultural activities. In contrast, damage sustained from the 2001 earthquakes exclusively stunted female migration. We argue that the reasons for this were that the earthquakes increased the demand for home production and that the costs of retaining women at home in the disaster's wake were lower than for men.