IDEAS home Printed from https://ideas.repec.org/a/uwp/jhriss/v46y2012ii1p456-492.html
   My bibliography  Save this article

Induced Innovation and Social Inequality: Evidence from Infant Medical Care

Author

Listed:
  • David M. Cutler
  • Ellen Meara
  • Seth Richards-Shubik

Abstract

We develop a model of induced innovation that applies to medical research. Our model yields three empirical predictions. First, initial death rates and subsequent research effort should be positively correlated. Second, research effort should be associated with more rapid mortality declines. Third, as a byproduct of targeting the most common conditions in the population as a whole, induced innovation leads to growth in mortality disparities between minority and majority groups. Using information on infant deaths in the United States between 1983 and 1998, we find support for all three empirical predictions.

Suggested Citation

  • David M. Cutler & Ellen Meara & Seth Richards-Shubik, 2012. "Induced Innovation and Social Inequality: Evidence from Infant Medical Care," Journal of Human Resources, University of Wisconsin Press, vol. 47(2), pages 456-492.
  • Handle: RePEc:uwp:jhriss:v:46:y:2012:ii:1:p:456-492
    as

    Download full text from publisher

    File URL: http://jhr.uwpress.org/cgi/reprint/47/2/456
    Download Restriction: A subscripton is required to access pdf files. Pay per article is available.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    2. Frank R. Lichtenberg, 2001. "The Allocation of Publicly Funded Biomedical Research," NBER Chapters, in: Medical Care Output and Productivity, National Bureau of Economic Research, Inc.
    3. Levy, Douglas E. & Meara, Ellen, 2006. "The effect of the 1998 Master Settlement Agreement on prenatal smoking," Journal of Health Economics, Elsevier, vol. 25(2), pages 276-294, March.
    4. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 1049-1090.
    5. David M. Cutler & Ernst R. Berndt, 2001. "Medical Care Output and Productivity," NBER Books, National Bureau of Economic Research, Inc, number cutl01-1, March.
    6. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    7. Jay Bhattacharya & Mikko Packalen, 2008. "Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation," NBER Working Papers 13862, National Bureau of Economic Research, Inc.
    8. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 941-975.
    9. David M. Cutler & Ellen Meara, 2000. "The Technology of Birth: Is It Worth It?," NBER Chapters, in: Frontiers in Health Policy Research, Volume 3, pages 33-68, National Bureau of Economic Research, Inc.
    10. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
    11. Waldfogel, Joel, 2008. "The median voter and the median consumer: Local private goods and population composition," Journal of Urban Economics, Elsevier, vol. 63(2), pages 567-582, March.
    12. Cutler David M. & Meara Ellen, 2000. "The Technology of Birth: Is It Worth It?," Forum for Health Economics & Policy, De Gruyter, vol. 3(1), pages 1-37, January.
    13. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    14. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    15. Rosen, Allison B. & Cutler, David & Vijan, Sandeep, 2006. "Value of Medical Innovation in the United States: 1960-2000," Scholarly Articles 2674791, Harvard University Department of Economics.
    16. Michael Kremer, 2002. "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 67-90, Fall.
    17. Schwartz, Amy Ellen & Ellen, Ingrid Gould & Voicu, Ioan & Schill, Michael H., 2006. "The external effects of place-based subsidized housing," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 679-707, November.
    18. Lisa George & Joel Waldfogel, 2003. "Who Affects Whom in Daily Newspaper Markets?," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 765-784, August.
    19. Alan M. Garber, 2000. "Frontiers in Health Policy Research, Volume 3," NBER Books, National Bureau of Economic Research, Inc, number garb00-1, March.
    20. Weisbrod, Burton A, 1991. "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 523-552, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lazuka, Volha, 2017. "Infant health and later-life labour market outcomes : Evidence from the introduction of sulfa antibiotics in Sweden," Lund Papers in Economic History 154, Lund University, Department of Economic History.
    2. Kevin A. Bryan & Heidi L. Williams, 2021. "Innovation: Market Failures and Public Policies," NBER Working Papers 29173, National Bureau of Economic Research, Inc.
    3. Elder Todd E & Goddeeris John H & Haider Steven J, 2011. "A Deadly Disparity: A Unified Assessment of the Black-White Infant Mortality Gap," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-44, June.
    4. Lazuka, Volha, 2019. "It’s a long walk: Lasting effects of maternity ward openings on labour market performance," Lund Papers in Economic History 187, Lund University, Department of Economic History.
    5. Lazuka, Volha, 2021. "Heterogeneous Returns to Medical Innovations," Lund Papers in Economic History 225, Lund University, Department of Economic History.
    6. Raphaël Godefroy, 2010. "The birth of the congressional clinic," Working Papers halshs-00564921, HAL.
    7. Jostein Grytten & Lars Monkerud & Irene Skau & Anne Eskild & Rune J. Sørensen & Ola Didrik Saugstad, 2017. "Saving Newborn Babies – The Benefits of Interventions in Neonatal Care in Norway over More Than 40 Years," Health Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 352-370, March.
    8. Sampat, Bhaven N., 2012. "Mission-oriented biomedical research at the NIH," Research Policy, Elsevier, vol. 41(10), pages 1729-1741.
    9. Volha Lazuka, 2022. "Household and individual economic responses to different health shocks: The role of medical innovations," Papers 2206.03306, arXiv.org, revised Nov 2022.
    10. Deepak Hegde & Bhaven Sampat, 2015. "Can Private Money Buy Public Science? Disease Group Lobbying and Federal Funding for Biomedical Research," Management Science, INFORMS, vol. 61(10), pages 2281-2298, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 1049-1090.
    2. Anupam B. Jena & Stéphane Mechoulan & Tomas J. Philipson, 2010. "Altruism and Innovation in Health Care," Journal of Law and Economics, University of Chicago Press, vol. 53(3), pages 497-518.
    3. Jeffrey Clemens, 2012. "The Effect of U.S. Health Insurance Expansions on Medical Innovation," Discussion Papers 11-016, Stanford Institute for Economic Policy Research.
    4. Bhattacharya, Jay & Packalen, Mikko, 2012. "The other ex ante moral hazard in health," Journal of Health Economics, Elsevier, vol. 31(1), pages 135-146.
    5. Fabrizio, Kira R. & Poczter, Sharon & Zelner, Bennet A., 2017. "Does innovation policy attract international competition? Evidence from energy storage," Research Policy, Elsevier, vol. 46(6), pages 1106-1117.
    6. Jay Bhattacharya & Mikko Packalen, 2008. "Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation," NBER Working Papers 13862, National Bureau of Economic Research, Inc.
    7. Bhattacharya, Jay & Packalen, Mikko, 2011. "Opportunities and benefits as determinants of the direction of scientific research," Journal of Health Economics, Elsevier, vol. 30(4), pages 603-615, July.
    8. Daron Acemoglu & Amy Finkelstein, 2008. "Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 837-880, October.
    9. Daron Acemoglu, 2010. "When Does Labor Scarcity Encourage Innovation?," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1037-1078.
    10. Xavier Vives, 2008. "Innovation And Competitive Pressure," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 419-469, December.
    11. Freedman, Seth & Lin, Haizhen & Simon, Kosali, 2015. "Public health insurance expansions and hospital technology adoption," Journal of Public Economics, Elsevier, vol. 121(C), pages 117-131.
    12. Raphaël Godefroy, 2010. "The birth of the congressional clinic," PSE Working Papers halshs-00564921, HAL.
    13. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2012. "Human Capital, Innovation, and Climate Policy: An Integrated Assessment," Working Papers 2012.18, Fondazione Eni Enrico Mattei.
    14. Rachel Ngai & Roberto Samaniego, 2011. "Accounting for Research and Productivity Growth Across Industries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 475-495, July.
    15. repec:dau:papers:123456789/7769 is not listed on IDEAS
    16. Carraro, Carlo & De Cian, Enrica & Nicita, Lea & Massetti, Emanuele & Verdolini, Elena, 2010. "Environmental Policy and Technical Change: A Survey," International Review of Environmental and Resource Economics, now publishers, vol. 4(2), pages 163-219, October.
    17. Felipa de Mello-Sampayo & Sofia de Sousa-Vale & Francisco Camoes, 2015. "Substitutability Between Drugs, Innovation, and Fiscal Policy in the Pharmaceutical Industry," Annals of Economics and Finance, Society for AEF, vol. 16(2), pages 273-289, November.
    18. Kurt Hornschild & Stephan Raab & Jörg-Peter Weiß, 2005. "Die Medizintechnik am Standort Deutschland: Chancen und Risiken durch technologische Innovationen, Auswirkungen auf und durch das nationale Gesundheitssystem sowie potentielle Wachstumsmärkte im Ausla," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, edition 2, volume 10, number pbk10.
    19. Bretschger, Lucas & Lechthaler, Filippo & Rausch, Sebastian & Zhang, Lin, 2017. "Knowledge diffusion, endogenous growth, and the costs of global climate policy," European Economic Review, Elsevier, vol. 93(C), pages 47-72.
    20. N. Meltem Daysal & Mircea Trandafir & Reyn van Ewijk, 2015. "Saving Lives at Birth: The Impact of Home Births on Infant Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 7(3), pages 28-50, July.
    21. Gunnarsson, Gudmundur & Mellander, Erik & Savvidou, Eleni, 2004. "Human capital is the key to the IT productivity paradox," Working Paper Series 2004:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwp:jhriss:v:46:y:2012:ii:1:p:456-492. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://jhr.uwpress.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: http://jhr.uwpress.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.