1 James P. Smith Childhood Health and the Effects on Adult SES Outcomes

2 Objective Summarize the effects of childhood health on major adult SES outcomes from an obscure but important panel Family effects can be ‘controlled’ since sibling data exist

3 Data –Panel Study of Income Dynamics (PSID) –Premier yearly panel data of full age distribution in US Started in 1967 so more than 40 years in panel now –All original PSID members and their immediate family members have been followed as panel members –Traditionally very strong on economic variables (income, wealth and work) Since 1999 expanding amount of information on current and past health of respondents

4 Data Since 1999 expanding amount of information on Adult health of respondents –Self-reported GHS and prevalence and incidence of major chronic conditions for all panel members –Standard list of health behaviors

5 Data Sample for Analysis –Respondents must be in PSID 1999 to have the right current health data –Select adult children of original PSID families— born between 1952 and 1974—so only up to around age 50 –Have all such siblings so unobserved common family and neighborhood effects can be dealt with –For such families have income, work, wealth and health histories for respondent, siblings, and parents

6 Data on childhood health –Respondents was asked multiple times to self- report their childhood health up to age 16 along standard scale from excellent to poor I convert it to ‘good health’ meaning excellent or very good Very little test- retest error in that formulation –In 2007 wave I put into PSID retrospective childhood health histories for seventeen important childhood diseases Also in HRS internet panel

7 Data on childhood health –How well are these new childhood recall data related to childhood health and to adult health –Does childhood health predict adult SES levels later in life and how strong are the effects

8 Comparison of Responses in Childhood Health Histories of HRS Internet Panel to External Sources and to PSID Respondents Ages 50+

9 Vaccine Licensed Measles—United States, CDC, 2007.

10 PSID Responses to Child Health History by Age Age in Year age < 1952 Year age <1936 Measles Mumps Chicken Pox Vaccine 1963 Vaccine 1967 Vaccine 1995

11 Predicting Self-Reported Childhood General Health Status (probit for childhood health being either Excellent or Very Good)

12 Predicting Self-Reported Adult General Health Status (probit for adult health being either Excellent or Very Good)

13 Self-reported Health Status Excellent or Very “Good” by Health Status before Age 16

14 Prevalence With or Without a Sibling Having the Disease/Condition Sibling without diseaseSibling with disease

15 Data on childhood health –How well are these new childhood recall data related to childhood health and to adult health –Does childhood health predict adult SES levels later in life and how big are the effects Have effects estimated now for self-reported childhood health –Disease specific ones are in progress »Show effects of psychological illness

16 Models Estimated Types of Models –Level Models Adult SES outcomes –1999 levels of education, household income, individual income, labor supply and wealth –Dynamic Models Changes between age 25 and year 1999

17 Predicting Adult Education in 1999–PSID

18 Predicting Adult Ln Household Income in 1999

19 Impact of Good Childhood Health on Family Income

20 Predicting Adult Ln Household Income at Age 25 and Change in Ln Household Income between Age 25 and 1999

21 Lifetime Family Income Effects of Good Childhood Health Total lifetime effect = $381, Age

22 What are the pathways? Predicting Adult Earnings in 1999

23 What are the pathways? Impact of Good Childhood Health on Weeks Worked Full Sample estimate is 2.3 weeks Within Sibling estimate is 4.3 weeks Labor supply effects come through both external (participation) and internal margins

24 Impact of Good Childhood Health on Individual Earnings

25 What are the pathways? Impact of Good Childhood Health on Spousal Earnings Correlation in Spousal childhood health is 0.34 Estimate of own childhood health on Spousal earnings is $2,367

26 Impact of Good Childhood Health on Family Wealth

27 Why are within sibling effects larger? Subjective threshold scales differ more across than within families Estimated Effects are bigger in larger families –Education is the exception Low correlation in price of education and childhood health Parents can compensate for education outcomes

28 Go inside disease Psychological problems before age 17 –Depression, drug/alcohol problems, other Can control for unobserved family effects and concomitant existence of physical illnesses during childhood Recall rates of these problems match closely contemporaneous prevalence rates for recent cohorts Examine effects on education, ln family income, individual earnings, weeks worked, household wealth, and marriage

29 Estimates of Impact of Childhood Psychological Problems on Adult SES Outcomes OLS Estimates All models control for age quadratic, gender, race, Hispanic, education of both parents, and parental income during childhood. Childhood health models add a set of controls for fifteen types of physical illnesses during childhood. Source Smith and Smith (2008)

30 Estimates of Impact of Childhood Psychological Problems on Adult SES Outcomes OLS Estimates All models control for age quadratic, gender, race, Hispanic, education of both parents, and parental income during childhood. Childhood health models add a set of controls for fifteen types of illnesses during childhood. Source Smith and Smith (2008) **Statistically significant at one percent level, * statistically significant at five percent level, + statistically significant at ten percent level.

31 Estimates of Impact of Childhood Psychological Problems on Adult SES Outcomes Fixed Effects Within Sibling Estimates All models control for age quadratic, gender, race, Hispanic, education of both parents, and parental income during childhood. Childhood health models add a set of controls for fifteen types of illnesses during childhood. Source Smith and Smith (2008) **Statistically significant at one percent level, * statistically significant at five percent level, + statistically significant at ten percent level.

32 Estimates of Impact of Childhood Psychological Problems on Adult SES Outcomes OLS Estimates All models control for age quadratic, gender, race, Hispanic, education of both parents, and parental income during childhood. Childhood health models add a set of controls for fifteen types of illnesses during childhood. Source Smith and Smith (2008) **Statistically significant at one percent level, * statistically significant at five percent level, + statistically significant at ten percent level.

33 Estimates of Impact of Childhood Psychological Problems on Adult SES Outcomes Fixed Effects Within Sibling Estimates All models control for age quadratic, gender, race, Hispanic, education of both parents, and parental income during childhood. Childhood health models add a set of controls for fifteen types of illnesses during childhood. Source Smith and Smith (2008) **Statistically significant at one percent level, * statistically significant at five percent level, + statistically significant at ten percent level.

34 Psychological problems before age 17 Weeks Worked effect separated into probability of working at all and weeks if work at least one week –75% of effect is participation in labor market Individual Earnings effect smaller than family income effect –Probability of being married reduced by ten percentage points –Also married spouse with lower earning capacity

35 Psychological Problems in Childhood Effects on Family Income are quite large –$10,400 per year or $300,000 per lifetime reduction in family income –2.1 trillion dollar lifetime loss in this country Ability to work and likelihood of marriage and who you end up marrying a large part of this

36 Is early childhood health important? Depends on what one means by important and for what –For those in ‘poor health’ as children it is very important for their adult economic and health lives –adults outcomes–ed, wealth, income in levels and growth trajectories –And also adult health But what fraction are in poor health as a child?

37 Is early childhood health important? Depends on what one means by important and for what But what fraction are not in good health as a child? –By my definition it is 17% in HRS and higher in PSID panel So it is clearly not the only thing that matters –Predictive Life does not end at age ten (months or years) –But a fifth of the sample is not trivial –Implications for Mortality not yet clear »But Mortality is not everything »Life is more important

38 Is early childhood health important?- An International Perspective Same Instruments have been put into full HRS panel in 2008 Also placed into the ELSA (the English HRS) and will be placed in SHARE (fifteen European countries) next wave

39 Prevalence of Diseases Before Age 17, Ages 55-64