The Long-Arm of Childhood Exposure to War

As if war wasn't destructive enough, a new working paper by Mevlude Akbulut-Yuksel at Dalhousie University finds that childhood exposure to conflict-induced destruction has a wide variety of consequences in adulthood:

During World War II, more than one-half million tons of bombs were dropped in aerial raids on German cities, destroying about one-third of the total housing stock nationwide. This paper provides causal evidence on long-term consequences of large-scale physical destruction on the educational attainment, health status and labor market outcomes of German children. I combine a unique dataset on city-level destruction in Germany caused by Allied Air Forces bombing during WWII with individual survey data from the German Socio-Economic Panel (GSOEP). My identification strategy exploits the plausibly exogenous city-by-cohort variation in the intensity of WWII destruction as a unique quasi-experiment. My findings suggest significant, long-lasting detrimental effects on the human capital formation, health and labor market outcomes of Germans who were at school-age during WWII. First, these children had 0.4 fewer years of schooling on average in adulthood, with those in the most hard-h! it cities completing 1.2 fewer years. Second, these children were about half inches (one centimeter) shorter and had lower self-reported health satisfaction in adulthood. Third, their future labor market earnings decreased by 6% on average due to exposure to wartime physical destruction. These results survive using alternative samples and specifications, including controlling for migration. Moreover, a control experiment using older cohorts who were not school-aged during WWII reveals no significant city-specific cohort trends. An important channel for the effect of destruction on educational attainment appears to be the destruction of schools and the absence of teachers, whereas malnutrition and destruction of health facilities during WWII seem to be important for the estimated impact on health.

Psychiatric Pharmacotherapy and Crime

I'm now on my psychiatry rotation, and it would be an understatement to say that it has been interesting. Washington University is a big believer in biological models of psychiatric diseases - which means I need to have a good command of neurobiology and pharmacology to really understand what is going on with the ward patients - and this sentiment has grown more generally in the last 20-25 years.

One of the things we are taught in terms of epidemiology is the link between psychiatric disease and crime. As such, from a health policy standpoint, if we are trying to understand the net social impact of pharmacotherapy for psychiatric disease, we need to understand the impacts this may have on crime in addition to disease burden. A new working paper by Dave Marcotte and Sara Markowitz attempts to look into this issue:

In this paper we consider possible links between the advent and diffusion of a number of new psychiatric pharmaceutical therapies and crime rates. We describe recent trends in crime and review the evidence showing mental illness as a clear risk factor both for criminal behavior and victimization. We then briefly summarize the development of a number of new pharmaceutical therapies for the treatment of mental illness which diffused during the “great American crime decline.” We examine limited international data, as well as more detailed American data to assess the relationship between crime rates and rates of prescriptions of the main categories of psychotropic drugs, while controlling for other factors which may explain trends in crime rates. We find that increases in prescriptions for psychiatric drugs in general are associated with decreases in violent crime, with the largest impacts associated with new generation antidepressants and stimulants used to treat ADHD. Our estimates imply that about 12 percent of the recent crime drop was due to expanded mental health treatment.

As you can imagine, the authors have to work pretty hard to deal with all the unobserved heterogeneity/confounding that might lead to the spurious estimates of the treatment-drug relationship. I think the authors do a decent job (though any analysis of this sort will have limitations) and the 12% number, while seemingly high, is still lower than postulated impacts of other sources of the crime decline (abortion, reductions in lead exposure), and enough so that it actually sounds plausible.

Variance in Physician Behaviors

I just finished my internal medicine clerkship a week ago. One of the more frustrating yet interesting things I noticed was how one attending physician would praise me for a suggestion while another would gently chastise me for making the same point. That physician behavior varies from one area to the next is well known. However, the kind of variation I experienced - within area variation is less well studied. This sort of variation is equally interesting and important for policy. Do physicians in the same area vary in practice styles because of their baseline experiences and subsequent Bayesian updating? Will physicians converge to the same set of practices or beliefs by learning from their peers?

Andrew Epstein and Sean Nicholson attempt to quantify and explain within area variation in an interesting paper forthcoming in the Journal of Health Economics. From their abstract:

Small-area-variation studies have shown that physician treatment styles differ substantially both between and within markets, controlling for patient characteristics. Using a data set containing the universe of deliveries in Florida over a 12-year period with consistent physician identifiers and a rich set of patient characteristics, we examine why treatment styles differ across obstetricians at a point in time, and why styles change over time. We find that the variation in c-section rates across physicians within a market is two to three times greater than the variation between markets. Surprisingly, residency programs explain less than four percent of the variation between physicians in their risk-adjusted c-section rates, even among newly-trained physicians. Although we find evidence that physicians, especially relatively inexperienced ones, learn from their peers, they do not substantially revise their prior beliefs regarding how patients should be treated due to the local exchange of information. Our results indicate that physicians are not likely to converge over time to a community standard; thus, within-market variation in treatment styles is likely to persist.

What is fascinating is that (a) early-career variation in treatment styles cannot be explained by the place and nature of training and (b) that while there is considerable cross talk across attending physicians, doctors are reluctant to change their beliefs. This makes things difficult from a policy standpoint: how do you get physicians on board with new guidelines or encourage local diffusion of best practices when the rate of change is so slow and the variation apparently idiosyncratic?

How the Steelers Can Win An Additional Game this Season

Fall means football, and the NFL season started off in full force last Saturday. Like any well-invested football fan, I've been following every piece of gossip and analysis in a futile attempt to predict outcomes and will the Pittsburgh Steelers to victory.

Interestingly, the most intriguing analysis of the year to date has come from a pair of economists, which includes Steve Levitt of Freakonomics fame. They write:

Game theory makes strong predictions about how individuals should behave in two player, zero sum games. When players follow a mixed strategy, equilibrium payoffs should be equalized across actions, and choices should be serially uncorrelated. Laboratory experiments have generated large and systematic deviations from the minimax predictions. Data gleaned from real-world settings have been more consistent with minimax, but these latter studies have often been based on small samples with low power to reject. In this paper, we explore minimax play in two high stakes, real world settings that are data rich: choice of pitch type in Major League Baseball and whether to run or pass in the National Football League. We observe more than three million pitches in baseball and 125,000 play choices for football. We find systematic deviations from minimax play in both data sets. Pitchers appear to throw too many fastballs; football teams pass less than they should. In both sports, there is negative serial correlation in play calling. Back of the envelope calculations suggest that correcting these decision making errors could be worth as many as two additional victories a year to a Major League Baseball franchise, and more than a half win per season for a professional football team.

Interesting stuff. I wonder if this article will garner as much controversy as a piece written a few years back by economist David Romer, whose analysis suggested that NFL teams play a risk-averse, sub-optimal strategy when punting the football outside of their own red zone.

Life Expectancy, US Health Care and Other Interesting Links

1. Samuel Preston and Jessica Y Ho on how reduced life expectancy in the United States need not implicate the health care system. I pointed out a similar argument in an earlier post. Here's a more spirited defense from Gary Becker.

2. Richard Posner and Gary Becker on the obesity epidemic, both making interesting, but not completely persuasive arguments. Posner argues that the growth in obesity, as well as its correlation with education, can be explained by a lack of information about the harms of fatty or calorie-laden foods. He argues that this implies that prevention campaigns that warn people of the dangers of fatty foods (through, for example, calorie labeling) are the best way to tackle the obesity epidemic.

Becker does not buy this (taking a not-so-subtle sweep at behavioral economics along the way), arguing that a fully-informed rational agent model can explain trends in body-weight. In particular, he argues that the development of effective pharmacotherapy for diseases like diabetes, hypertension and coronary artery disease may dissuade individuals from giving up unhealthy foods since the future cost of consumption are attenuated. He also criticizes Posner's position that obese individuals confer externalities on other members of society.

3. The NBER has a set of links to video lectures by John List and Michael Kremer on field experiments in economics and in developing countries, respectively. I've seen the latter set and it is quite good.

World Oil Prices and Child Health

Yale Political Science graduate student Brian Fried and I have a new working paper looking at how fluctuations in world fuel prices impact child respiratory health. Here is the abstract:

Acute respiratory infections secondary to indoor air pollution from the use biomass fuels such as wood, dung and crop residues, are an important but under-explored cause of morbidity and mortality among children in the developing world. Designing policies to address this issue requires an understanding of the determinants of household fuel choice. This study explores one particular determinant, fluctuations in world fuel prices, which impact the local prices of clean-burning fuels such as liquid propane gasoline (LPG). Using a rich, nationally representative survey dataset from Guatemala, we explored the association between shocks to world fuel prices, measures of household biomass fuel use, and the respiratory health of children under the age of six. Our core finding was that a $1 (3.6%) increase in the (one week lagged) world oil price was associated with nearly a 3 percentage point increase in the likelihood of a child under the age of six experiencing respiratory symptoms. This association is likely driven by changes in household fuel use: increases in oil prices were associated with increases in the time spent cooking by the child’s mother and by the likelihood that the household collected firewood, both of which indicate a switch to biomass fuels. In addition, the fuel price effect on child respiratory health was strongest among very young children, who are more dependent on their mothers and therefore are more exposed to cooking smoke, and was nonexistent in areas that did not have markets for LPG, where substitution across clean and dirty fuels is not possible. Our results have important implications for policies aimed at reducing the burden of disease from respiratory illnesses secondary to exposure to pollutants from biomass fuels.

Worthy Links on Health Care Reform

1. An article in Slate about physician incentives and their relationship to salary, all in the context of health care reform. The punchline: health care reform likely won't make a dent in physician reimbursement given the power of the doctor lobby and that fact that the government cannot interfere easily when much of health care is funded privately. I think the former point is true, and very sad, since doctors need to realize they respond to incentives just like anyone else. The latter seems like an overstatement: a fair amount of health care dollars (45%) come from public sources. Not a typo.

2. Another interesting piece in Slate, measuring up the US health care reform against our nation's deepest core economic and social values. The juxtaposition is interesting because it is at once jarring and at once perfectly consistent. I will let you read the piece to see what I mean. It's completely worth it: I haven't seen the health care reform debate phrased in this manner and it's definitely a refreshing perspective.

Economic Shocks, Risky Sexual Behavior and the HIV/AIDS Epidemic

The relationship between poverty and HIV/AIDS is a tricky one to pin down empirically. Studies have found widely different associations between SES and the likelihood of having been infected, though the positive association between education and HIV risk appears to be stable across time and space (see this excellent paper by Jane Fortson).

Aside from permanent economic status, transitory shocks may have some impact on the HIV/AIDS epidemic, as well. The idea is that bad times may induce people to engage in riskier sex because of market returns to such behaviors. The possibility of transient shocks in driving sexual behavior and, consequently, the HIV/AIDS epidemic is an intriguing one, especially given the potential prominence of "transactional sex" - sex in exchange for gifts, favors, etc (i.e., not necessarily prostitution!) - in African countries.

Two recent papers having examined this issue in the context of commercial sex workers. A study by Pascaline Dupas and Jonathan Robinson looks at the effects of political instability in Kenya circa 2007, which led to civil conflict and adverse economic times, on the behavior of commercial sex workers (CSWs). They find that CSWs were more likely to engage in unprotected sex after the adverse shock. A paper by Robinson and Ethan Yeh tells a similar story: CSWs in Kenya were more likely to have a variety of different types of riskier sex in response to income shocks. Both of these studies are well done from the stand point of data collection (how many people have panel data on CSWs??) and statistics (causality is plausibly inferred from both pieces).

In some African countries, however, CSW is not a common practice while transactional sex, more broadly, is. In such areas, it would be interesting to look at how the sexual behaviors of the general population respond to income shocks. My colleague Brendan Maughan-Brown, from the University of Cape Town, and I are working on this in the context of Khayelitsha, a township of Cape Town, SA, where antenatal clinic data indicates an HIV/AIDS of over 30%. Using longitudinal data from an effectively random sample of the township, we found (from individual fixed effects models) that people responded to income shocks by reducing condom usage. Interestingly, we found the same result when looking at individuals who were on anti-retroviral therapy for HIV/AIDS (draft forthcoming - will keep you posted).

We are currently trying to understand whether our results reflect a price mechanism (individuals cannot afford to pay the cost of obtaining and using condoms during bad times) or a consumption smoothing mechanism (individuals engage in riskier sex to get by during bad times). Either way, we have compelling evidence that economic shocks may play a role in driving the HIV/AIDS epidemic.

"Sin Taxes," Public Health, and Targeting

"Sin taxes" have been all the rage for some time, with the idea being that people respond to hikes in the prices of various deleterious substances by reducing their unhealthy behaviors. Taxes on goods such as tobacco and alcohol are often justified on the grounds that people's unhealthy behaviors have social costs: one man's boozing and smoking adversely affects those around him.

Conventional wisdom suggests that, on average, such taxes work. However, taxes may work differently for different people. As far as health promotion, one would expect sin taxes to be most powerful if they can effectively help change among individuals who have more severe and intractable problems with smoking and drinking.

Some of my colleagues at Yale (including two of my advisers, Jason Fletcher and Jody Sindelar) have produced some interesting work looking into the effectiveness of tobacco and alcohol taxes on different types of smokers and drinkers, respectively. To explore heterogeneity among smokers and drinkers, they use a latent class method (finite mixture models - discussed two posts ago) to identify different groups of people. What the find is striking: for tobacco use among adolescents and alcohol use among adults, taxes are least effective among groups that tend to smoke or drink more heavily and who generally have the least willpower to quit. The authors make use of very detailed data on people's behaviors, preferences and outlook on life to build these interesting stories.

The results suggest that, among those least likely to quit on their own, taxes appear to have little power in inducing behavior change. Basically, from a public health standpoint, if one is interested in reducing unhealthy behaviors in these populations, policies other than/in addition to taxes will likely be required.

Two Year Anniversary

Having found myself short on sleep and time over the last few weeks, I forgot to write a note here about the two year anniversary of my blog. Basically, I started this whole thing in July 2007 as a travel blog and somehow continued with it through my prospectus and dissertation writing. I'm really happy with how the blog has turned out and am grateful for your thoughtful comments.

I should point out that I fully intend to continue blogging at my usual pace once I achieve an optimal work-sleep-eat equilibrium here in med school! In the meantime, please bear with me and continue to check this space from time to time for new content.

Thank you again for your readership and support. It's been a fun two years and I look forward to more.

Links: Problems with American Health Care, Job Loss and Unhealthy Behaviors

1. A really interesting piece in the NYT about inefficiency in American health care. The piece, by David Leonhardt, uses prostate cancer as a lens to highlight the gaps between clinical practice and the existing research evidence (or lack thereof). Pretty eye opening stuff.

2. More on American health care: a great piece from The Economist about the challenges awaiting health care reform.

3. My colleagues at Yale, Padmaja Ayyagari, Bill Gallo, Jason Fletcher and Jody Sindelar, along with Partha Deb from CUNY Hunter, have an interesting new paper looking at how job loss influences subsequent unhealthy behaviors. Aside from the interesting research question, this paper is pretty interesting from a methodological standpoint in that they use plausibly (more) exogenous in job loss by exploiting information on business closings as well as employ finite mixture models to model the underlying heterogeneity in effects and people's propensity for unhealthy behaviors. The latter technique is becoming quite hot in health economics now as there is increasing interest in trying to understand how individuals may differ in their underlying propensities towards different behaviors and disease.

Access to Neonatal Care and Cognition

Ken Chay, Jonathan Gurvan and Bhaskar Mazumdar have an interesting working paper looking at the impacts of improved access to health care during infancy and cognitive test scores. The paper follows black cohorts born before and after desegregation of hospitals in the 1960s and tracks their performance on different cognitive test scores. The main result of the paper is that the convergence in black-white test scores can be explained in large part by improve access to health care. As expected, this convergence is greatest in areas which stood to gain most from the Civil Rights Act. This paper is related to an earlier study, which looked at the birth weights of babies born to black mothers before and after desegregation.

The main message of this piece is that early childhood experiences matter and have long-run benefits. While the previous research in this area has tended to look at the impacts of shocks (famines, recessions, droughts, etc), this paper looks at the impacts of an actual policy and is therefore one step closer to policy relevance. I have a forthcoming working paper that takes a similar approach, looking at the long-run impacts of public health investments in Mexico. Like the study discussed here, I, too, find substantial benefits of such interventions. The next step is to quantify these benefits and assess how this affects resource allocation decisions, which is of great interest and utility to policy makers.

Another thing I like about this paper is its attention to the problem of inference. The study is 72 pages long for a reason: establishing causality is difficult, especially with so many things going on during the time the affected cohorts were born. The authors engage in an impressive number of robustness checks and econometric fixes to rule out competing hypothesis. The authors also present many of their results graphically, which helps put everything on the table up front.

I'm almost tempted to print out their paper and use it as a program evaluation reference...

Back to the Clinic

I will be starting my third year clinical rotations tomorrow. I'm definitely excited for this: I've been away from medical school for a long time and I look forward to getting back into things and, this time, actually interacting with patients and providers.

Starting third year has a few implications for my blog. First, on difficult rotations I would expect my frequency of posting and length per post to decline. I will try my best not to let this happen, using the blog as my econ outlet especially during months where any substantial research is not realistic to undertake. Second, I will probably include more observations about American health care, especially as it relates to my hospital experiences, than I have in the past. This is a change I welcome: part of what will make my third year more interesting than it would have been pre-PhD is that I now see things with a different set of eyes. I also would like to learn more about American health care, and blogging more about these issues is one step towards that end.

In any case, I look forward to updating this space in the coming months and offering new perspectives and comments. I also look forward to your continued readerships and comments.

Height, Life Satisfaction and Taxes

Angus Deaton and Rakesh Arora, in a recent NBER working paper, show that:

According to the Gallup-Healthways Well-Being Index daily poll of the US population, taller people live better lives, at least on average. They evaluate their lives more favorably, and they are more likely to report a range of positive emotions such as enjoyment and happiness. They are also less likely to report a range of negative experiences, like sadness, and physical pain, though they are more likely to experience stress and anger, and if they are women, to worry. These findings cannot be attributed to different demographic or ethnic characteristics of taller people, but are almost entirely explained by the positive association between height and both income and education, both of which are positively linked to better lives.

Given the correlation between height and life satisfaction, perhaps stature could be the basis for an optimally designed tax? Mankiw and Weinzeirl explore this idea in another working paper:

Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard Utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wages implies a substantial height tax: a tall person earning $50,000 should pay $4,500 more in tax than a short person. One interpretation is that personal attributes correlated with wages should be considered more widely for determining taxes. Alternatively, if policies such as a height tax are rejected, then the standard Utilitarian framework must fail to capture intuitive notions of distributive justice.

Public Goods and Dentists

A really interesting paper by Katherine Ho and Matthew Neidell looks at how public goods (goods that people cannot be excluded from, and goods for which use by one person does not diminish use for another) impact businesses. Specifically, they look at fluoridation and the dentistry business. In their own words:

In this paper we consider how the dental industry responded to the addition of fluoride to public drinking water. We take advantage of the staggered introduction of fluoridation throughout the country to analyze the changes in numbers of within-county dentists relative to physicians in the years surrounding the change in fluoridation status. We find a significant decrease in the number of dental establishments and an even larger reduction in the number of employees per firm following fluoridation. We also find that fluoridation in neighboring markets was associated with an increase in own-market dental supply, suggesting that dentists responded to the demand shock by moving from fluoridated areas to close-by markets. Further analysis suggests that some dentists may have retrained as specialists rather than moving geographically. Our estimates imply that the 8 percentage point change in exposure to water fluoridation from 1974 to 1992 may have led to the loss of as many as 0.6 percent of dental establishments and 2.1 percent of dental employees, suggesting a substantial net impact of this public good on the dental profession since its inception.

Pretty good stuff. Neidell has used this identification strategy before, but to look at the effects of good teeth on wages.

Politicians and Poverty Reduction

A long line of work in political science centers around the topic of clientelism, also known as vote buying. The idea is that politicians (the patrons) provide goods, services or benefits to the public or to those not in positions of power in exchange for votes. (Such favors, for example, could involve the allocation of a large development project to a swing-locality or district). There are lots of reasons to be displeased with "vote-buying" but a big one concerns the marginal returns to public expenditure: funds that are allocated for political reasons may not be allocated productively from the standpoint of some other societal goal. For example, if we are interested in poverty reduction, public funds should be allocated to those who are actually poor (yes, I am oversimplifying here!). Obviously, there is no guarantee that funds allocated by a political formula will follow this more technocratic logic.

So are we destined to an equilibrium where the incentives of politicians and the public are not well-aligned? Not so, according to two recent studies which examine the political impacts of conditional cash transfer programs (CCTs), which are schemes that provide cash to poor families who meet certain objectives (i.e., attending monthly check-ups, sending their children to school, etc; see here for a beautifully detailed account of CCTs the world over) and have been shown to have had numerous positive benefits on health, schooling and general circumstances faced by the poor. The first, by Yale political scientist Ana de la O, looks at the impact of the Mexican CCT, Progresa. Progresa was initially rolled out to a randomly selected subset of localities before more universal rollout a year and a half later. De la O uses this variation to show that people randomly exposed to Progresa longer are around 5 percentage points more likely to vote for the incumbent.

In the second study, Marco Manacorda, Ted Miguel and Andrea Vigorito use a regression discontinuity approach to identify the political impacts of Uruguayan CCT PANES. Comparing individuals just on either side of a pre-designated eligibility score (based on a composite of household and individual socioeconomic characteristics), they find that cash transfers lead to a whopping 21-28 percentage point increase in the probability of voting for the incumbent!

What I like about these papers, besides the use of program evaluation methods to identify causal impacts on voting behavior, is that it suggests that there is a better equilibrium out there: politicians can get re-elected on the basis of policies that have demonstrated large and positive effects on human development rather than through doling out public funds in potentially unproductive ways. My hope is that this catches on in other parts of the world...

Some Graduate School Advice

I just graduated with my PhD a few weeks ago and have been spending some time thinking over my grad school experience. In the coming weeks, I'm sure I have a lot to say about choosing a grad school, a research field, an advisor, etc, but I thought I'd start by talking about the most important things I learned during the journey. Here goes:

(1) Follow all your leads and persevere: The most important piece of advice I've got. Most projects will not go smoothly, either because of lack of data, some weird programming bug, or some other unforeseen difficulty. If you think it's a good project, with your intuition screaming "yes" and you sense that a breakthrough is possible, KEEP GOING. Sometimes you need to hit your head against the wall, over and over, till it breaks down. I was in this position about seven months ago, needing a third paper for my dissertation and not sure if I was going to get it to work in time to graduate by May. I found some interesting preliminary results on the long-run effects of clean water and I decided to go forward, working really hard to get data and program what turned about to be conceptually easy, but difficult in practice. It paid off, and I am hoping to expand this paper over the next year in several ways.

As far as the "following all your leads" part, if you think of an interesting question, find some data (it's usually very cheap!) and spend an hour or two seeing if you can't get some preliminary evidence or "proof of concept." If you do, follow it up: the results may surprise you and might have an interesting project on your hands.

(2) But know when to stop: This applies to two situations. The first is with a project that just won't work out anytime soon. And the second is with a mostly complete project. In both situations, the marginal hour, or tweak here and there, will likely not lead anywhere. In the first case, stop, but always keep it in your mind: you're breakthrough could happen a few years later. In the latter case, send the thing out already!

Of course, while you're in the thick of it it's hard to distinguish between when you should take route (1) or (2) [I've been late to pull the trigger on several occasions!]. I think that's part of what graduate school gives you, an intuition of when things will work and when they won't. Until you get there, the best way to distinguish between (1) and (2) is to outsource the experience and intuition based calls to people who have a comparative advantage in these things: your advisors.

(3) Sell, sell, sell!: This is something I really picked up in the last six months of grad school. How well your paper does or how well your talk is received is really based on (a) whether your intended audience gets what you are saying and (b) how well you couch your work in the larger scheme of things. Basically, people need to understand what you are doing and realize that it is important. The only way to get this is with a nice sales job.

For people in fields that are necessarily interdisciplinary (health economics or health service researchers both fit that bill), you need to be able to communicate to people who look at problems with a different disciplinary lens. I noticed that my talks went a lot better when I cut out the economics jargon and explained things in a more universal language. My writing got better from this, as well.

In motivating talks and papers, it is always important to bring in the larger literature first, show where your study is situated, and, at multiple junctures, point out exactly why your study is important and all the new stuff it adds to our knowledge. Humility is good, I've learned, but too much gets you left behind. (On the same plane, too much boasting is bad, too. Never oversell your paper!)

(4) Get really good at fundamentals: My personal view is that it is a lot easier to learn about different topics than it is to pick up different skills. As such, I think the best investment during your graduate years, especially when you are taking classes, is to invest in skills. In any statistics based field, being a quant jock makes you the cool kid at school: everyone will want to work with you.

This doesn't mean that one shouldn't read up on interesting topics. Far from it (see below)! Just make sure you get the requisite tools.

(5) Always work the margins: Grad school is full of ups and downs. On the research side, you'll go from being uber productive to not so productive and back again. I think its really important to have a strategy of riding out low marginal productivity months. This might be the time that you (a) read a lot (b) write a lot (c) take a vacation. Whatever you do, make sure you do it with relish. At some point you will become productive again and have a storm of ideas. When you do, embrace it and go to town.

Some other nuggets of note:
(6) Keep a notebook or pda with a list and short description of all your ideas: Some of them won't pan out initially, but you might be able to revisit them in the future.

(7) Read the popular press: Two of my working papers have come from taking data to statements and problems outlined in newspaper/magazine articles.

(8) Read the literature, but don't binge on it: Some good advice that I got early in grad school was to know the literature, but don't read so much that it destroys your creativity. If you think of an interesting idea, play with it in your mind and ask yourself how you'd address the research question. Once you do, Google Scholar it and see if its been done. If it has, pat yourself on the back for coming up with an interesting question and do it again if the authors adopted your methodology. If not, go to town.

Easterly/Sachs Debate and Other Links

1. Bill Easterly and Jeffrey Sachs have a lively back-and-forth going on the Huffington Post about how best to tackle global poverty (see here and click the links for previous posts). The debate is informative and also fun from an entertainment standpoint.

2. Nice post from Steve Levitt about how free-markets and poverty reduction strategies can co-exist.

3. If you're bored or devoid of fun these days, here you go.

Measuring Obesity

A simple, yet illuminating paper (often the best kind of paper!) on the obesity epidemic and why we need measurements beyond BMI:

There are several ways to measure fatness and obesity, each with its own strengths and weaknesses. The primary measure for tracking the prevalence of obesity has historically been body mass index (BMI). This paper compares long-run trends in the prevalence of obesity when obesity is defined using skinfold thickness instead of body mass index (BMI), using data from the full series of U.S. National Health Examination Surveys. The results indicate that when one uses skinfold thicknesses rather than BMI to define obesity, the rise in the prevalence of obesity is detectable ten to twenty years earlier. This underscores the importance of examining multiple measures of fatness when monitoring or otherwise studying obesity.

Now Online: My Talk on Disability Grants and Adherence to HAART in South Africa

You can find it here (you'll need RealPlayer or RealAlternative to view it). Here is a description of the study, conducted by myself, Brendan Maughan-Brown (University of Cape Town), Nicoli Nattrass (University of Cape Town) and Jennifer Ruger (Yale) from a previous post.

We are currently working on a new draft of this paper and should have that ready in a week or so. In the meantime, I'd love to hear your comments on how to improve upon this study.

HIV/AIDS and the Erosion of Medical Care

A new and important paper by Anne Case and Christina Paxson finds the following:

We document the impact of the AIDS crisis on non-AIDS related health services in fourteen sub-Saharan African countries. Using multiple waves of Demographic and Health Surveys (DHS) for each country, we examine antenatal care, birth deliveries, and rates of immunization for children born between 1988 and 2005. We find deterioration in nearly all of these dimensions of health care over this period. The most recent DHS survey for each country collected data on HIV prevalence, which allows us to examine the association between HIV burden and health care. We find that erosion of health services is highly correlated with increases in AIDS prevalence. Regions of countries that have light AIDS burdens have witnessed small or no declines in health care, using the measures noted above, while those regions currently shouldering the heaviest burdens have seen the largest erosion in treatment for pregnant women and children. Using semi-parametric techniques, we can date the beginning of the divergence in health services between high and low HIV regions to the mid-1990s.

Case and Paxson are unable to pin down a mechanism for why this is happening. They suggest it is not driven by an erosion of wealth (though the data they use is somewhat lacking in measures of health beyond asset ownership) or reduced demand for medical care by HIV+ mothers. On the other hand, they cannot rule out adverse impacts of HIV/AIDS on the supply of health care workers and/or the diversion of resources to those with HIV/AIDS, perhaps at the expense of other aspects of medical care. As such, the authors rightly point out that there is more work to be done and that this work needs to be done very soon.

I'll have more to say about this in a forthcoming post.

The Human Development Index

Justin Wolfers put up an interesting post on the Freakonomics blog today about the Human Development Index (HDI), a summary statistic that combines information on life expectancy, schooling outcomes and income per capita. He cites a post by Andrew Gelman, which makes the claim that the Human Development Index for the 50 U.S. states provides little information above and beyond what state income per capita tells you.

Some thoughts:

1) The HDI was first developed in 1990 as a good faith effort to move beyond income as a measure of development. The idea was to capture other aspects of society and wellness that we might think are important in making people content and happy. The fact that there is little information beyond what a simpler measure of income per capita tells you is discouraging on the one hand, as it might imply that we aren't measuring non-monetary aspects of development well. On the other hand, the finding might suggest that wealth creation brings about the other aspects of development we care about, even if these other aspects are important ends in and of themselves.

2) It is important to ask what the content of the HDI is, how it is calculated, and its utility in informing policy. On this note, I'm a bit surprised that neither Wolfers or Gelman cite a seminal paper by my mentor from Duke, Allen Kelley. Written in 1991, Kelley notes the close correspondence between national income per capita and HDI, but also goes into the sausage factory of how the HDI is constructed (its a bit arbitrary) and what the statistic may or may not be able to tell us. The subtitle of his piece, "handle with care," gives you a good sense of his skepticism. The fact that the same skepticism remains warranted nearly 20 years later is more than a bit disturbing.

3) Finally, the blog fivethirtyeight.com is fantastic: the authors use data and elegant statistics to delve deeper into various political and social issues that are often taken for granted. It was first recommended to me by Joachim Hero, and I am now linking it in the sidebar for your enjoyment.

Links: Obama on Global Health, Kindergarten, and the Indian Marriage Market

1. Karen Grepin provides a nice discussion on Obama's comprehensive strategy on global health. While you are there, check out her interesting piece on advocacy and neglect in the global health arena.

2. In an interesting new paper, Elizabeth Cascio finds that the introduction of kindergarten programs in the 1960s and 70s led to reduced drop out and institutionalization rates among whites but not blacks. The differential effect, she posits, might have something to do with crowding out federally funded programs helping the poorest black five year olds. I'm not so convinced about this as the mechanism, and I think there is a study waiting to happen that looks at health effects, as well.

3. A fun new paper by Abhijit Banerjee and co-authors looks at the Indian marriage market. From the abstract:

This paper studies the role played by caste, education and other social and economic attributes in arranged marriages among middle-class Indians. We use a unique data set on individuals who placed matrimonial advertisements in a major newspaper, the responses they received, how they ranked them, and the eventual matches. We estimate the preferences for caste, education, beauty, and other attributes. We then compute a set of stable matches, which we compare to the actual matches that we observe in the data. We find the stable matches to be quite similar to the actual matches, suggesting a relatively frictionless marriage market. One of our key empirical findings is that there is a very strong preference for within-caste marriage. However, because both sides of the market share this preference and because the groups are fairly homogeneous in terms of the distribution of other attributes, in equilibrium, the cost of wanting to marry within-caste is low. This allows caste to remain a persistent feature of the Indian marriage market.

Imports and Development

It's always fun when a friend or colleague of yours is mentioned in The Economist. Last week was no exception, when the venerable periodical covered a recent piece on trade co-authored by Amit Khandelwal, a former Yale economics graduate student now at the Columbia Graduate School of Business as an assistant professor.

The research in question looks at the effects of imports on aspects of economic development. As the Economist piece points out, in policy discussions on trade, there is this belief that exporting is good for the home country's development, but importing is not. Khandelwal et al's piece shows that, in the case of India, imports have had some positive benefits. Quoting from the news article:

As part of those reforms, India slashed tariffs on imports from an average of 90% in 1991 to 30% in 1997. Not surprisingly, imports doubled in value over this period. But the effects on Indian manufacturing were not what the prophets of doom had predicted: output grew by over 50% in that time. And by looking carefully at what was imported and what it was used to make, the researchers found that cheaper and more accessible imports gave a big boost to India’s domestic industrial growth in the 1990s.

This was because the tariff cuts meant more than Indian consumers being able to satisfy their cravings for imported chocolate (though they did that, too). It gave Indian manufacturers access to a variety of intermediate and capital goods which had earlier been too expensive. The rise in imports of intermediate goods was much higher, at 227%, than the 90% growth in consumer-goods imports in the 13 years to 2000.

Good stuff.

Antidepressants and Suicide

Whether antidepressant use increase suicide risk in the short-term is an ongoing debate in the clinical medicine and health policy worlds. A few years back, based on some evidence that antidepressant use was correlated with a higher risk of suicide, the FDA issued a "black box" warning, forcing manufacturers to acknowledge the increased risks on packaging and materials related to the drugs. The public responded predictably: antidepressant use dropped notably after the warning. (See this 2006 article for more on the issue)

The biomedical model that links antidepressant use to suicide is the following. Depressive symptoms involve both mood and reduced activity. Antidepressants, it is thought, start working by increasing activation before mood. As a result, the hypothesis is that, in the short term, people who have suicidal thoughts may actually carry it out because they are now "activated."

But is there another explanation that could explain the link between anti-depressants and suicide? An important possibility is selection: anti-depressants are taken by people with depressive symptoms, who are more likely to commit suicide. The fact that the association between anti-depressant use and suicide only exists in the short-run could be explained by this selection model as well: those who would commit suicide would do so, and those who are left may have been unlikely to do so in the first place or were prevented from doing so by the medication.

The overall literature on anti-depressants and suicide gives some support to the selection hypothesis. First off, the relationship between use and suicide seems to vary from study to study and across countries. We would not expect this if the biological model were correct. Second, the "black box" warning provides an interesting time series test. In several countries, the use of anti-depressants dropped after the public was informed about the potential risks, and the incidence of suicides actually increased. This runs counter to what we would expect from the biological mechanism model.

A recent paper (forthcoming in the Journal of Health Economics) provides what I think is the most careful analysis of the causal relationship between anti-depressant use and suicide, taking explicitly into account the potential selection bias issue. The authors, Jens Ludwig, Dave Marcotte and Karen Norberg, utilize an instrumental variables (IV) approach:

In this paper we present what we believe to be the first estimates for the effects of SSRIs on suicide using both a plausibly exogenous source of identifying variation and adequate statistical power to detect effects on mortality that are much smaller than anything that could be detected from randomized trials. We construct a panel dataset with suicide rates and SSRI sales per capita for 26 countries for up to 25 years. Since SSRI sales may be endogenous, we exploit institutional differences across countries that affect how they regulate, price, distribute and use prescription drugs in general (Berndt et al., 2007). Since we do not have direct measures for these institutional characteristics for all countries, we use data on drug diffusion rates as a proxy. We show that sales growth for SSRIs is strongly related to the rate of sales growth of the other major new drugs that were introduced in the 1980s for the treatment of non-psychiatric health conditions. This source of variation in SSRI sales helps overcome the problem of reverse causation and many of the most obvious omitted-variables concerns with past studies. Our research design may also have broader applications for the study of how other drug classes affect different health outcomes.

Using this strategy, they find that a 12% increase in anti-depressant sales is associated with a 5% decrease in suicides. Interesting stuff.

While the main innovation in the paper is the use of instrumental variables, this may also the main weakness. First, as discussed in previous posts, in order for the IV approach to work, the instruments should only affect the outcome through the exposure of interest. The authors in this paper go through some trouble to establish the validity of their IVs. Its all carefully done and compelling, but, depending on your priors about institutional differences in pricing strategies, you may still have qualms about the IV.

The other issue with IVs, is that the effect it computes applies to those people (or here, groups of people) that are most affected or sensitive by the instrument (see this earlier post for more on this). Thus, it is very important to note that the finding in this paper does not rule out the possibility that anti-depressant use might have adverse impacts on some populations. I think this is of particular interest to clinicians, and there are new methods in econometrics that can help uncover heterogeneity in treatment effects (see this paper on the heterogeneous impacts of treatment on breast cancer, utilizing methods developed by Heckman and co-authors).

Staying Off Facebook with Help from Behavioral Economics

A few days ago, I got pretty annoyed with some stuff on Facebook and wanted to stay away from it for a while. Unfortunately, logging into Facebook is too easy. Actually, somehow I'm always signed on on my laptop and blackberry. That, coupled with the fact that I addictively check my newsfeed and spend a lot of time in front of my computer, made it difficult to stay off of the site for long.

So, I decided to take a more "drastic" step: deactivation. While I guess you can never really leave Facebook, you can take your profile offline. Deactivation means that others cannot find you, message you or whatever.

Since I've deactivated, I haven't been on Facebook for a couple days and things are just great. But, at first blush, it might be a mystery to some as to why deactivation would work. After all, to reactivate, I'd just have to log back into the website (yeah, it's just that easy). So how could this have any effect on my Facebook behavior? I think there are a few reasons:

(1) I like marginal costs that are essentially zero. Deactivation raises the marginal cost of going on Facebook just a little bit, which might work to totally devalue what in my head should be a free experience (see here for a good discussion of this phenomenon in another context).

(2) Deactivation works for me as a self/pre-commitment device (see here for a broader discussion). I realized I'd feel a lot worse repeatedly deactivating and reactivating rather than just navigating from Facebook to another page and back. In the former case, I'd feel like more of a flake or diva for signing off a service and going back on, whereas that kind of behavior is more easily justified when you are already part of the service.

So behavioral economics has helped me get around my Facebook conundrum. Interestingly, various behavioral economics inspired "nudges" almost stopped me from establishing my pre-commitment device. When you go to deactivate, you are shown pictures of your five of your friends (from your jointly tagged pictures) with captions like "Mike will miss you," all below the question "Are you sure you want to deactivate?" Furthermore, below the pictures, you are asked to provide a reason for why you want to deactivate, and for all of the choices except "This is temporary. I'll be back" Facebook gives you a pithy statement about why you might want to reconsider.

Finally, see you on Facebook...at some point in the future.

The Cost of Political Opposition

Dissent is an important part of public discourse in any setting. In a truly democratic regime, one would expect dissent to carry little cost (though I expect it might in hard to observe ways). But what about in autocratic regimes? What is the price of opposing the ruling party?

In a recent working paper, Chang-Tai Hsieh, Edward Miguel, Daniel Ortega and Francisco Rodriguez try to address this question in the context of the Hugo Chavez led Venezuela. In their own words:

In 2004, the Chávez regime in Venezuela distributed the list of several million voters whom had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chavez political opponent. We find that voters who were identified as Chavez opponents experienced a 5 percent drop in earnings and a 1.5 percentage point drop in employment rates after the voter list was released. A back-of-the-envelope calculation suggests that the loss aggregate TFP from the misallocation of workers across jobs was substantial, on the order of 3 percent of GDP.

That political opposition in an autocratic regime can invite economic retribution is not that surprising, but the 3% of GDP number kind of is. It's just a great illustration of how the incentives of the public and autocratic leaders are not aligned: one would hope that a 3% loss of GDP would have dissuaded Chavez from going after his opposition.

All in all, a really interesting, if not very sad, read.

(Ed: Marginal Revolution has an interesting take on this paper, as well)

Shaan's Blog and Swine Flu

My friend, former tennis partner and former Yale MPHer Shaan Chatturvedi has just started blogging about his experiences in Guyana, where he is currently a working for the CDC Global AIDS Program. His most recent post, on the swine flu outbreak, is fantastic and promises of good things to come from his blog. Do check it out!

For more on the swine flu, check out this interesting article by Dr. Carlos del Rio, the chair of the Global Health Department of the Emory School of Public Health. There is a lot of interesting stuff in there about different control measures and the reasons why swine flu mortality might be higher in Mexico than in the US.

Long-Run and Intergenerational Effects of Early Childhood Environments

Great NBER working paper this week on the long-run and next generation returns to early life conditions. Specifically, Eric Gould and co-authors look at consequences driven by the airlift of Yemenite immigrants into Israel. In their own words:

This paper estimates the effect of the childhood environment on a large array of social and economic outcomes lasting almost 60 years, for both the affected cohorts and for their children. To do this, we exploit a natural experiment provided by the 1949 Magic Carpet operation, where over 50,000 Yemenite immigrants were airlifted to Israel. The Yemenites, who lacked any formal schooling or knowledge of a western-style culture or bureaucracy, believed that they were being "redeemed," and put their trust in the Israeli authorities to make decisions about where they should go and what they should do. As a result, they were scattered across the country in essentially a random fashion, and as we show, the environmental conditions faced by immigrant children were not correlated with other factors that affected the long-term outcomes of individuals. We construct three summary measures of the childhood environment: 1) whether the home had running water, sanitation and electricity; 2) whether the locality of residence was in an urban environment with a good economic infrastructure; and 3) whether the locality of residence was a Yemenite enclave. We find that children who were placed in a good environment (a home with good sanitary conditions, in a city, and outside of an ethnic enclave) were more likely to achieve positive long-term outcomes. They were more likely to obtain higher education, marry at an older age, have fewer children, work at age 55, be more assimilated into Israeli society, be less religious, and have more worldly tastes in music and food. These effects are much more pronounced for women than for men. We find weaker and somewhat mixed effects on health outcomes, and no effect on political views. We do find an effect on the next generation – children who lived in a better environment grew up to have children who achieved higher educational attainment.

I find this paper noteworthy for several reasons:

(1) The authors have a credible and interesting source of variation, and the actual early life exposures they look at have immediate policy implications

(2) The authors explore a wide variety of different outcomes, including behavioral aspects. In my dissertation, I argued that long-run returns need to be taken into account when making resource allocation decisions. However, this is difficult if only a subset of long-run returns are known. This paper really hits this gap.

(3) Finally, and more self-serving, the long-run effects of sanitation and clean water jive well with my thesis paper on the National Clean Water Program in Mexico (see the next post).

Correlation Does Not Imply Causation. And...?

Since I started grad school four years ago, I've noticed that the general public is much more attuned to idea of correlation not always implying causation. Of course, the indoctrination is not complete just yet, and there are plenty of instances where an association is mistaken for something more, but the fact that people are becoming better consumers of statistics is gratifying. I attribute this to the spate of popular press economics and statistics books/blogs in the last few years (though I might be in danger of confusing correlation and causation myself by saying this!)

The standards in empirical research reflect how seriously people are taking this motto: finding a clever instrumental variable or even experimental variation is no longer good enough. Papers without extensive "robustness" checks and falsification tests have less credibility now than they would have even five years ago. This, like the trend in the general public, is a good development.

However, with these positives come some more troubling tendencies. Specifically, I have a beef with the overuse of the causation-correlation dictum. Now, anybody can bring down a paper simply by saying "correlation does not imply causation" without having to provide a reason why this might be the case. For example, I am working on a paper looking at the long-run causal effects of birth year exposure to a clean water and sanitation efforts (I'll post a link to this paper in a month or so when a good draft is ready). I have a plausible identification strategy, and also include all sorts of controls, trends and falsification checks in my analysis to further establish causality. My results check out.

However, someone recently remarked told me that I should be concerned about omitted variables. When I pressed her on what these might be, she wasn't sure but commented that "there are always omitted factors."

Clearly, this isn't helpful. It's really easy to look/sound clever and point out that correlation does not imply causation: it is technically a true statement! But I think people who make this claim should talk about how it applies to the analysis at hand (i.e., have some kind of model or story that makes more explicit the nature of the potential biases and where they come from). Otherwise, the statement by itself is pretty uninformative and does little to advance our knowledge.

Peer Effects in Technology Adoption and Consumer Decisions and Other Interesting Links

1. Emily Oster and Rebecca Thorton have an interesting new paper that uses individual-level randomization to understand, among other things, how peers affect a woman's decision to utilize newly introduced menstrual cups in Nepal.

2. Enrico Moretti looks at the importance of social learning from peers in consumption decisions - particularly the decision to see different movies. I really like this paper: Moretti starts with a theoretical model and uses the uniqueness of the film industry to test it. It's great stuff. And he goes on to find that social learning is non-trivial:

Overall, social learning appears to be an important determinant of sales in the movie industry, accounting for 32% of sales for the typical movie with positive surprise. This implies the existence of a large “social multiplier” such that the elasticity of aggregate demand to movie quality is larger than the elasticity of individual demand to movie quality.

3. Behavioral economics strikes again! Apparently a good way to save money is to carry around Benjamins over Abes and Georges.

4. The Economist is right on about the decision to move the Indian Premier League cricket matches to South Africa because of the upcoming election in India. What kind of aspiring superpower justifies moving a thriving capitalist enterprise by claiming that they cannot guarantee the safety of the players and spectators? Isn't this exactly what terrorists want to happen?

Is the Row Over AIG Bonuses Getting Ridiculous?

Yes.

Certainly, handing out a bonus package running in the hundreds of millions of dollars during a recession seems like poor form. Especially so when the firm involved played a big role in bringing the house of cards down. However, the public vitriol over this mess has taken on a disturbing character.

A recent open resignation letter by a former AIG VP printed in the New York Times does a pretty good job of laying out the argument. Basically:

(1) Salaries at AIG are low and most people make money through bonuses.
(2) The people responsible for the failure of AIG are no longer working there. The contended bonuses weren't meant to be given out to people in unrelated divisions doing unrelated things.
(3) The bonuses were part of a contractual obligation to get good workers to stay on during tough times. But more fundamentally, the bonuses were part of a compensation package promised to employees before AIG became the demon.

My beef with the whole row hinges on (3). It's ridiculous for people to demand the bonuses to be paid back (or to try and tax these at the rate of 90% or something like this). Nobody should be able to meddle with contracts retroactively. This is because this kind of activity could discourage people from generating real wealth during these tough times: why would anyone try to make money in this climate if they believe they are going to be demonized and that the government will try to take their money away. The bonuses row could serve as a huge disincentive for undertaking the kind of economic activities that we desperately need now.

Reason (2) also deserves some attention. While I don't see it as the best argument against the retroactive penalities (the whole company as a team argument), we need to think about how a few people could derail an entire financial system despite being around a majority of people who were engaged in activities that ostensibly generated real wealth. Perhaps the Geithner regulatory plan, to be announced sometime soon, will address this in a constructive way that doesn't hamper wealth creation.

Whatever the case may be, it is time to put down the pitchforks and start thinking about these issues in a more constructive (and less obviously destructive) manner.

Experiments, Natural Experiments and Learning about Development Policy - I

A while back I blogged about the Jameel Poverty Action Lab, a non-profit organization started and run by economists carrying out randomized field experiments all over the developing world. The purpose of these experiments is to build an evidence base to inform policy-making, and randomization as a tool towards this end has become quite popular of late. Proponents of randomization, now called "randomistas", argue that, as with medical clinical trials, field experiments are the "gold standard" in development policy evaluation.

But is this really so? In two recent pieces, Angus Deaton and Martin Ravallion argue that the answer is "no." One of their main arguments centers around the idea of heterogeneity in treatment effects, which basically refers to how policies do not have the same impacts for everyone. Consider an example where we are thinking about implementing some large policy and want to learn whether it might be effective. To do so, we consult data from a recent experiment in which some individuals in the sample have been randomized to receive "treatment." We then compare the treatment and control group outcomes.

Randomization of individuals to treatment gives us confidence that the results of the experiments are not biased. However, the concern is whether one can learn something useful about the policy from this experiment. In most field experiments, individuals in the treatment group are either enrolled in a program or incentivized to participate in some way. In most cases, not everyone complies, and some groups of individuals tend to be more likely to comply than others.

The important thing to note is that the program effects that are recovered from the experiment is most reflective of the returns to the group of compliers. This is referred to as a "local average treatment effect", or LATE. Here is where the problem comes in: the LATE that an experiment recovers may not always be policy relevant and, unlike the issue of limited external validity (experimental results in one setting may not apply to others), it is not clear that replications will help get around this problem. To reiterate, the benefits of the program that infer from an experiment may or may not be informative about this program on a larger scale.

Ultimately, this is problem of experiments being "atheoretical." That is, simply looking at experimental averages is not enough: we have to understand who in the treatment group actually responds to the randomization and takes up treatment and whether this group is of interest to the broader policy picture. Building this understanding brings us back to economic theory: we need a model. In this sense, the argument goes, proponents of randomization who argue that field experiments are "easy" by obviating the need for models or (strong) assumptions are badly mistaken.

I find this argument compelling. Indeed, there is a parallel literature in the "natural experiments" world that makes similar points. Ultimately, policy design and resource allocation decisions require a great deal of information, only some of which we can get from randomized experiments. Experiments that incorporate theory and heterogeneity, Deaton argues, will be good step towards making the method more useful towards policy decisions. In the next post, I will list a few examples of experimental and quasi-experimental studies that take an approach more grounded in theory.

Private Equity Firms, Orange Juice, and Other Interesting Links

1. Private equity firms spent much of the last decade throwing around large sums of money buying out companies and selling them out for profit after a series of adjustments. The high profile nature of these buyouts and the sheer amount of capital being thrown around begs the following question: what is/was it all for? In a recent working paper, Philip Leslie and Paul Oyer ask whether private equity firms "create value." Their results depressingly suggest than the answer is "no."

2. Steven Levitt has a great post on the intersection between orange juice, environmentalism, and behavioral economics.

3. Will the financial downturn mean less US money for global health? Karen Grepin reports that these outlays are safe for now.

4. Bouts of occasional stupidity are apparently very good for your development as a researcher (summary of the article here). I have yet to see any returns from this. (HT: Melanie Elliot)

Kenya to Deworm, Female Bank Robbers and Other Random Links

I'm in full-scale dissertation writing mode, so all you're getting from me between now and March 16th are links (if that). Enjoy!

1. Kenya has decided to roll-out a nationwide, school-based deworming program. The impetus for this likely came from some now famous experimental research carried out by Poverty Action Lab researchers Edward Miguel and Michael Kremer, showing that deworming (a) has large effects on school attendance and that these impacts are underestimated if one doesn't account for externalities (i.e., worms are infectious) and (b) is a highly cost effective way to improve schooling.

2. Martin Anderson, a former Yale MPHer and now a PhD student in Health Economics at Harvard, has started writing for the Social Science Statistics Blog (linked in the sidebar). His first post, on Medicaid drug procurement and the market for pharmaceuticals, is awesome.

3. Will tax credits stimulate the economy? Evidence from 2008 suggests not.

4. The number or share of bank robberies committed by women: a new leading or coincident indicator?

Rising Incomes and Health Care Expenditures

We all know that health care expenditures as a percentage of GDP (per capita) has increased greatly over the last few decades and that this phenomenon has been observed in the US and foreign countries alike. Recent research has tried to understand the determinants of this increase and one common explanation is that health care is a luxury good: that is, as incomes rise people demand more and more of it. In some sense, this might make rising health care expenditures less ominous: we spend more only because it is an expression of our preferences.

Empirical evidence linking incomes to health generally supports the luxury good hypothesis and is based on establishing correlations between the two in micro and aggregate data. However, in a recent working paper, Daron Acemoglu, Amy Finkelstein, and Matthew Notowidigdo argue that this evidence may be misleading for two reasons. First, simple correlations do not capture other unobserved factors associated with income that might affect health. Second, such models do not distinguish between/account for partial and general equilibrium effects: for example, rising demand for health care generated by income may increase spending both through increased local demand, but also through supply side changes in medical technology or practices that respond to changes in demand. In addition, rising incomes and demand may lead to changes in the politics around health care and health services. In either case, it is important to understand both partial and general equilibrium t truly characterize the relationship between income and health.

Acemoglu, Finkelstein and Notowidigo try to get around both of these issues by utilizing shocks to oil prices. The basic idea of their paper is the following:

1) Look at a bunch of smaller areas which may or may not have pre-existing oil industries.
2) Changes in world oil prices, which are not driven by small industry in any single area will affect localities with oil industries differently than those without them. Thus, these two types of areas will experience different "shocks" to income. (Thus, the effect of income on health care demand is identified by the interaction between pre-existing oil industries and world oil price shocks). The next step is to look at the association between predicted income from oil price shocks and measures of health care demand.
3) Establish that general equilibrium effects occur at the level of localities and that it is unlikely that changes in local demand have equilibrium effects on larger regions (such as nations or the world).

The authors findings strongly suggest that health care is NOT a luxury good and that rising incomes likely cannot explain an important portion of the rise in health care expenditures.

Neat paper on an interesting area of research, and definitely worth reading.

Financial Crisis Trickling Down...

Time Magazine recently put out a piece identifying "25 People to Blame for the Financial Crisis." Actually, their piece should be retitled "300 Million People to Blame..." because one of the parties they accuse is the set of American consumers. The charge? Living beyond their means.

On this note, I've noticed recently that everyone is taking small steps to try and survive the downturn, sometimes in the most unexpected places/ways. Consider what happened to me yesterday:

1) I was told that I would have to provide my own cake for my upcoming thesis defense because the Graduate School was no longer making such purchases.

2) I was kicked out of Au Bon Pain because the management wanted to close up shop an hour early. One of the employees told me that the reason for this was that the cost of paying him for the extra hour and using the electricity far exceeded anything they would get from additional business. He went on to mention that, recently, the store would close early if number of customers was low, and urged me to bring my friends to ABP as well as to the nearby also suffering Gourmet Heaven.

Will the forthcoming tax breaks/credits and wages paid out to the labor force soaked up in infrastructure related jobs induce us to stimulate the economy by spending more money at ABP or on cakes? Only time will tell. At present though, the difference between our habits last year this time and our actions now are striking. I wonder if our new found parsimony will persist even after the crisis weathers: some recent research by Ulrike Malmendier and Stefan Nagel (see here for a summary) has shown that recession/depression era cohorts do have different investment habits (those experiencing macroeconomic hardship at young ages tend to be less risky and are less likely to participate in the stock market). Perhaps this extends to savings and spending behaviors, as well. Thoughts?

Prospects for the Stimulus Package and Other Links

1. I lot of people have asked me what I think about the stimulus package and I have no idea what to tell them. Bigwig economists are of little help, as well: everyone has a different view on whether this thing will work or not. Some recent pieces in The Economist's Voice illustrate the diversity of opinions on the plan. All well written and worth checking out.

2. I'm sure by now you've heard about PETA's banned Super Bowl ad, which unabashedly claims that "vegetarians have better sex." Justin Wolfers at Freakonomics checks this contention out in the data, providing an interesting discussion on the whole correlation vs. causation angle to boot (it's not what you think).

3. The link between vaccines and autism (which has some frighteningly strident supporters) always seemed a bit dodgy to me. Turns out that at least parts of the original Lancet article this whole movement was based on may have been falsified. A good lesson on responsible science: said paper precipitated a drop in MMR vaccination coverage from over 90% to just 80% in Britain. It's worth being careful in publishing results that will induce people to do potentially unwise things based on tenuous evidence.

"Dakar to Port Loko"

I recently went to a screening of Yale political science graduate student Nathaniel Cogley's extremely well-done and worthwhile documentary "Dakar to Port Loko: Perspectives from West Africa". I highly recommend this film. Nathaniel spent a few years in West Africa after college, camcorder in tow, with his goal being to "let Africans speak for themselves." And, boy, do they: the film covers everything from opinions on US international policy, to civil war, to microcredit. It's eye opening stuff all around.

Chris Blattman with more about the film and Nathaniel's very interesting background (as well as video of the film's trailer).

Risky Behaviors and HIV

An interesting paper by Pascaline Dupas looks at information provision and their impacts on HIV-related risk behaviors among youngsters and has something to say about what works and what doesn't (here is a non-gated version):

I use a randomized experiment to test whether information can change sexual behavior among teenagers in Kenya. Providing information on the relative risk of HIV infection by partner's age led to a 28% decrease in teen pregnancy, an objective proxy for the incidence of unprotected sex. Self-reported sexual behavior data suggests substitution away from older (riskier) partners and towards protected sex with same-age partners. In contrast, the national abstinence-only HIV education curriculum had no impact on teen pregnancy. These results suggest that teenagers are responsive to risk information but their sexual behavior is more elastic on the intensive than on the extensive margin.

That information might be more useful in making existing behaviors less risky but not eliminating them altogether was a point critics of PEPFAR made most vociferously. Indeed, this is a finding that is probably in line with most people's priors.

Workshops at Yale's StatLab

Here is the schedule for statistical package workshops offered through Yale's StatLab for Spring 2009. On the bill are workshops for HTML, Stata, SPSS and R, as well as tutorials on data management and survey data. I highly recommend these workshops for anyone interested in doing empirical work. I took the beginner Stata and R workshops during my first year of graduate school and both served as a great platform upon which to play around and add new knowledge.

There are some excellent web-based tutorials for statistical packages as well. My favorite is the UCLA Academic Technology Services Statistical Computing page, which offers a plethora of links (including pages for Stata, SAS, SPSS, and R).

Interesting Global Health Blogs

I recently came across two interesting blogs on global health. The first is by Karen Grepin, a PhD candidate at Harvard, and the second is out of MIT. Both blogs are more policy oriented and deal with hot issues in global health - spending, funding, disease outbreaks, etc - about which I somehow seem to know little (despite me being interested in, among other things, "international health"). You'll find both spaced linked in the sidebar from now on.

Dissertation Teaser

Here are the first few bars of my dissertation's introduction. (I'm planning to submit the thesis by March 16):

There are wide disparities in health and socioeconomic outcomes both within and across countries. Recent work in economics and epidemiology suggests that differences in conditions faced by individuals very early in their lives may help explain a substantive portion of these gaps. In particular, exposure to a variety of shocks and investments in utero and in early childhood is strongly associated with differences in morbidity and mortality risk, cognition, and socioeconomic status over the rest of the life cycle. There is evidence that the effects of these shocks extend across generations, as well. Work from the biomedical sciences suggests that these long-run and intergenerational impacts may be driven by complex biological processes, where early life environmental conditions induce adaptive changes in gene expression and physiological processes that persist into adulthood. While such changes may allow individuals to survive environmental insults in the short run, they may be deleterious to health, mental capacity and productivity in the longer-run.

The literature on the persistence of early life conditions has grown considerably in the last decade. However, many important questions remain unanswered and warrant research attention. First, the policy implications of much of the literature on early life shocks are not obvious. While studies of the long-run effects of events such as famines, droughts, pandemics, recessions and other plausibly exogenous shocks allow for more confidence in inferring causality, their results do not readily suggest appropriate directions for policy intervention. Second, outside of evidence from animal studies, little is known about the mechanisms underlying these long-run effects, particularly in the context of intergenerational impacts and cross-generational correlations in health, more broadly. Finally, there is little consensus on the extent to which disparities in early life conditions can account for the gaps in health, human capital and economic status at various points in the life course and the extent to which such impacts can modulated by investments and conditions faced later in life. This dissertation attempts to address these gaps in the literature and primarily focuses on developing countries, for which evidence on the long-run effects of early life conditions is relatively scant.

"Slumdog" Child Actors: Part III

This just in from Entertainment Weekly:

Back in November, when Slumdog Millionaire was just starting to heat up, I interviewed director Danny Boyle for a feature in Entertainment Weekly. At one point, we chatted about the challenge of hiring and directing three small local children who spoke only Hindi. One, Ayush Mahesh Khedekar (who plays the youngest Jamal), comes from a middle-class background, while the other two, Rubina Ali and Azharuddin Ismail (who play the youngest Latika and Salim), are from Mumbai slums similar to those depicted in the film. Boyle mentioned that he and the producers, cognizant of how a movie like Slumdog could change the kids’ lives for the worse if proper care wasn’t taken, had set up a trust fund for Ali and Ismail, accessible only if they enrolled in school -- a first for both of them. “They’d never been to school,” Boyle said. “So they have to stay in school until they’re 18. When they reach 18, and if they’ve passed all their exams, a quite substantial sum of money -- extra money [on top of their salaries] -- will be released to them.”

Boyle wasn’t presenting this in a Look at what a good, moral Westerner I am! See how I take care of the less fortunate! kind of way. Rather, he was explaining a course of action that, to me, seemed logical, responsible, and just. But now, an article printed in Britain's The Telegraph earlier this week has stained those good intentions with accusations of exploitation. In the story, Ali and Ismail’s parents accuse Boyle and producer Christian Colson of stiffing their kids out of a decent wage, alleging that their payment for a year’s work was “less than many Indian domestic servants.” This article comes on the heels of earlier reports that many Indians are taking offense with the title of the movie. Consider the flames of the inevitable Slumdog backlash duly fanned.

The movie’s distributor, Fox Searchlight, as well as Boyle and Colson, all have responded to the Telegraph story with statements, asserting that “For 30 days’ work, the children were paid three times the average local annual adult salary,” and that the families have been given funds to cover “basic living costs, health care, and any other emergencies.” A subsequent Reuters news clip shows the father of one of the kids back-pedaling on the accusations, but is it possible the damage is done? The kids’ lives are now disrupted, with camera crews busting into their classrooms. Moreover, concerned that such public talk of money could make Ali, Ismail, and their families a target for local Mumbai criminals, Searchlight has moved them into private housing. For now, it seems this mess isn’t as out of hand as what happened with The Kite Runner kids in 2007, but how does the situation sit with you, PopWathgers? Who, if anyone, is at fault here? The media for stirring up drama? Searchlight? The Parents? And does the controversy affect how you feel about Slumdog?

So the trust fund is indeed a conditional cash transfer, which strikes me as paternalistic (similar to the strategy Dan and Valli discussed in their comments in the last post). At the same time, I like the fact that the children's families basic needs were addressed. Either way, I would have loved to be a fly on the wall during the numerous discussions that must have gone down regarding these payments.

"Slumdog" Child Actors: Part II

So, as it turns out, Hollywood has taken care of the child actors in Slumdog Millionaire. Quoting a quote from a Freakonomics blog post:

Danny Boyle placed the money to be paid to the three lead child actors in a trust that is to be released to them upon their completion of grade school at 16 years of age. The production company has set up for an autorickshaw driver to take the kids to school every day until they are 16 years old.

Upon their completion of grade school? Is this a conditional cash transfer? Is the reason not to pay to children now because of child labor law or paternalism or both? And have the producers met their obligation, if any, to help these kids out of poverty?

Seriously. I'd love to hear your thoughts.

Is Hollywood Responsible for "Slumdog" Child Actors?

My sister just sent over an interesting piece about the child actors in "Slumdog Millionaire." As it turns out:

Azharuddin Mohammed Ismail, who plays the youngest version of the main character's brother Salim in the film, lives with his parents and siblings in a makeshift plastic tent, pitched on a half-finished government park.

Besides friends and neighbours, he has a big garbage dump and armies of mosquitoes and flies for company.

Ten-year-old Azharuddin's mother says they have been homeless for a while: "We have been squatting on this government park since the time our hutments were demolished over a year ago and despite showing the right documents to the authorities we have not been allotted our room [a one-room tiny flat]."

Rubina Ali - who portrays the youngest version of the leading lady Latika in the film - is playing with Azhar and other children.

Their faces glow in the rays of the fading sunlight. They greet the BBC team with coyness. Ask them to pronounce the film's title and they fumble amid nervous smiles. "Aslum dog minaire," says Rubina. "No," Azhar tries to correct her, with his own incorrect version.

Here is a question I am pondering: do the producers of "Slumdog Millionaire" have a responsibility to help these child actors out of poverty? Especially when that same poverty was used to entertain millions? I'd like to hear your thoughts.

By the way, you should see "Slumdog Millionaire" - it's excellent.