Working Paper: NBER ID: w17931
Authors: Emily Oster; Ira Shoulson; E Ray Dorsey
Abstract: One of the most basic predictions of human capital theory is that life expectancy should impact human capital investment. Limited exogenous variation in life expectancy makes this difficult to test, especially in the contexts most relevant to the macroeconomic applications. We estimate the relationship between life expectancy and human capital investments using genetic variation in life expectancy driven by Huntington disease (HD), an inherited degenerative neurological disorder with large impacts on mortality. We compare investment levels for individuals who have ex ante identical risks of HD but learn (through early symptom development or genetic testing) that they do or do not carry the genetic mutation which causes the disease. We find strong qualitative support: individuals with more limited life expectancy complete less education and less job training. We estimate the elasticity of demand for college completion with respect to years of life expectancy of 0.40. This figure implies that differences in life expectancy explain about 10% of cross-country differences in college enrollment. Finally, we use smoking and cancer screening data to test the corollary that health capital is responsive to life expectancy.
Keywords: Human Capital; Life Expectancy; Huntington Disease; Health Investments
JEL Codes: I15; I25; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Individuals who learn they carry the HD mutation (I12) | Complete less education and job training (I21) |
| Individuals who learn they carry the HD mutation (I12) | Less likely to quit smoking (I12) |
| Individuals who learn they carry the HD mutation (I12) | Less likely to undergo cancer screening (I12) |
| Life expectancy (J17) | Educational attainment (I21) |
| Life expectancy (J17) | Health capital investments (smoking and cancer screening) (I12) |