Working Paper: NBER ID: w7390
Authors: David M. Cutler; Ellen Meara
Abstract: We evaluate the costs and benefits of increased medical spending for low birth weight infants. Lifetime spending on low birth weight babies increased by roughly $40,000 per birth between 1950 and 1990. The health improvements resulting from this have been substantial. Infant mortality rates fell by 72 percent over this time period, largely due to improved care for premature births. Considering both length and quality of life, we estimate the rate of return for care of low birth weight infants at over 500 percent. Although prenatal care and influenza shots are more cost effective than neonatal care, this is significantly more cost effective than other recent innovations such as coronary artery bypass surgery, treatment of severe hypertension, or routine pap smears for women aged 20-74. We conclude that the answer to the question posed in this paper is a resounding 'Yes'.
Keywords: medical technology; low birth weight infants; health outcomes; cost-benefit analysis
JEL Codes: I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased medical spending on low birth weight infants (H51) | improved health outcomes (I14) |
| increased medical spending on low birth weight infants (H51) | substantial health improvement (I19) |
| improvements in survival rates (I14) | advancements in medical technology (O33) |
| increased medical spending on low birth weight infants (H51) | reduction in infant mortality rates (J13) |
| care for low birth weight infants (J13) | significant improvement compared to other medical interventions (I19) |