Working Paper: NBER ID: w22200
Authors: Petri Bäckerman; John Cawley; Jutta Viinikainen; Terho Lehtimäki; Suvi Rovio; Ilkka Seppälä; Jaakko Pehkonen; Olli Raitakari
Abstract: The increase in the prevalence of obesity worldwide has led to great interest in the economic consequences of obesity, but valid and powerful instruments for obesity, which are needed to estimate its causal effects, are rare. This paper contributes to the literature by using a novel instrument: genetic risk score, which reflects the predisposition to higher body mass index across many genetic loci. We estimate IV models of the effect of BMI on labor market outcomes using Finnish data that have many strengths: genetic information, measured body mass index, and administrative earnings records that are free of the problems associated with non-response, self-reporting error or top-coding.\n\nThe first stage of the IV models indicate that genetic risk score is a powerful instrument, and the available evidence from the genetics literature is consistent with instrument validity. The results of the IV models indicate weight reduces earnings and employment and increases social income transfers, although we caution that the results are based on small samples, and are sensitive to specification and subsample.
Keywords: obesity; labor market outcomes; genetic instrumental variables; body mass index; earnings; employment
JEL Codes: D62; I1; I12; J01; J24; J3; J7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| BMI (I12) | Earnings (J31) |
| BMI (I12) | Employment Outcomes (J68) |
| BMI (I12) | Probability of Receiving Social Income Transfers (H55) |
| BMI (I12) | Amount of Social Income Transfers (H55) |
| Genetic Risk Score for BMI (C29) | BMI (I12) |