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

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  • Emily Oster
  • Ira Shoulson
  • E. Ray Dorsey

Abstract

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.

Suggested Citation

  • Emily Oster & Ira Shoulson & E. Ray Dorsey, 2012. "Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease," NBER Working Papers 17931, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17931 Note: AG LS
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    References listed on IDEAS

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    1. Oster, Emily, 2012. "HIV and sexual behavior change: Why not Africa?," Journal of Health Economics, Elsevier, vol. 31(1), pages 35-49.
    2. Rodrigo R. Soares, 2005. "Mortality Reductions, Educational Attainment, and Fertility Choice," American Economic Review, American Economic Association, pages 580-601.
    3. 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 223-255, March-Apr.
    4. 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.
    5. Seema Jayachandran & Adriana Lleras-Muney, 2009. "Life Expectancy and Human Capital Investments: Evidence from Maternal Mortality Declines," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 349-397.
    6. 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 352-352.
    7. Hoyt Bleakley, 2007. "Disease and Development: Evidence from Hookworm Eradication in the American South," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 73-117.
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    Cited by:

    1. repec:trp:01jefa:jefa0008 is not listed on IDEAS
    2. John Karl Scholz & Ananth Seshadri, 2016. "The Interaction between Consumption and Health in Retirement," Working Papers wp344, University of Michigan, Michigan Retirement Research Center.
    3. Abdulkadir Civan & Michael Maloney, 2015. "Launch Decisions of Pharmaceutical Companies," European Journal of Economic and Political Studies, Fatih University, vol. 8(2), pages 35-58.

    More about this item

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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