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Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease

  • Emily Oster
  • Ira Shoulson
  • E. Ray Dorsey

One of the most basic predictions of human capital theory is that life expectancy should impact human capital investment. Limited exogenous variation in life expectancy makes this difficult to test, especially in the contexts most relevant to the macroeconomic applications. We estimate the relationship between life expectancy and human capital investments using genetic variation in life expectancy driven by Huntington disease (HD), an inherited degenerative neurological disorder with large impacts on mortality. We compare investment levels for individuals who have ex ante identical risks of HD but learn (through early symptom development or genetic testing) that they do or do not carry the genetic mutation which causes the disease. We find strong qualitative support: individuals with more limited life expectancy complete less education and less job training. We estimate the elasticity of demand for college completion with respect to years of life expectancy of 0.40. This figure implies that differences in life expectancy explain about 10% of cross-country differences in college enrollment. Finally, we use smoking and cancer screening data to test the corollary that health capital is responsive to life expectancy.

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File URL: http://www.nber.org/papers/w17931.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17931.

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Date of creation: Mar 2012
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Publication status: published as “Limited Life Expectancy, Human Capital and Health Investments” (with E. Ray Dorsey and Ira Shoulson). American Economic Review, 103 (5): p. 1977-2002 (August 2013).
Handle: RePEc:nbr:nberwo:17931
Note: AG LS
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Web page: http://www.nber.org
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  1. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  2. Rodrigo R. Soares, 2004. "Mortality Reductions, Educational Attainment, and Fertility Choice," Econometric Society 2004 North American Winter Meetings 9, Econometric Society.
  3. Seema Jayachandran & Adriana Lleras-Muney, 2008. "Life Expectancy and Human Capital Investments: Evidence From Maternal Mortality Declines," NBER Working Papers 13947, National Bureau of Economic Research, Inc.
  4. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  5. Hoyt Bleakley, 2007. "Disease and Development: Evidence from Hookworm Eradication in the American South," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 73-117, 02.
  6. Emily Oster, 2007. "HIV and Sexual Behavior Change: Why Not Africa?," NBER Working Papers 13049, National Bureau of Economic Research, Inc.
  7. William H. Dow & Tomas Philipson & Xavier Sala-i-Martin & Jessica Holmes, 1997. "Health investment complementarities under competing risks," Economics Working Papers 192, Department of Economics and Business, Universitat Pompeu Fabra.
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