Infant health production functions: what a difference the data make

We examine the extent to which infant health production functions are sensitive to model specification and measurement error. We focus on the importance of typically unobserved but theoretically important variables (typically unobserved variables, TUVs), other non‐standard covariates (NSCs), input reporting, and characterization of infant health. The TUVs represent wantedness, taste for risky behavior, and maternal health endowment. The NSCs include father characteristics. We estimate the effects of prenatal drug use, prenatal cigarette smoking, and first trimester prenatal care on birth weight, low birth weight, and a measure of abnormal infant health conditions. We compare estimates using self‐reported inputs versus input measures that combine information from medical records and self‐reports. We find that TUVs and NSCs are significantly associated with both inputs and outcomes, but that excluding them from infant health production functions does not appreciably affect the input estimates. However, using self‐reported inputs leads to overestimated effects of inputs, particularly prenatal care, on outcomes, and using a direct measure of infant health does not always yield input estimates similar to those when using birth weight outcomes. The findings have implications for research, data collection, and public health policy. Copyright © 2008 John Wiley & Sons, Ltd.