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Distinguished Lecture: Child Health As Human Capital

Princeton’s Janet Currie explains how public health insurance improves lives

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Mental health is one of the most important determinants of adult outcomes, especially if you're looking at adults of working age.”

Janet Currie
Henry Putnam Professor of Economics and Public Affairs, Princeton University

Janet Currie
Janet Currie lectured on the importance of child health to long-term academic and labor outcomes. 

If the Oxford Dictionary defines capital as “a valuable resource of a particular kind,” Princeton economist Janet Currie explained, “human capital then is a particular form of wealth, embodied in people.”

As the Fall 2019 Distinguished Public Policy Lecturer at Northwestern’s Institute for Policy Research (IPR), Currie highlighted the mounting evidence for “Child Health as Human Capital” for the 80-plus in attendance.

She laid out how children’s health, both physical and mental, can predict their long-term prospects as adults, how expansion of public insurance in the U.S. has helped to shore up this capital—and concluded with why we urgently need more research on mental health.

“Janet is truly a pioneer in the economic analysis of child development,” IPR director and economist Diane Whitmore Schanzenbach said in introducing her. “She has numerous top journal publications that have shaped—and reshaped—this important field.”

Child Health and Nature v. Nurture

When it comes to understanding human capital, economists used to focus exclusively on education. Today, however, child health is considered on its own. Currie reviewed studies that detail how external events like pollution and stress had large effects on an adult when she or he was exposed in utero.

When referring to such research, people often ask whether nature or nurture is more important. But that question is “nonsense,” Currie explained. “It's really the interaction between the two that matters,” she said.

As an example, she described a study on intergenerational transmission of birth weight she co-authored with Enrico Moretti of the University of California, Berkeley. They show mothers who themselves were underweight at birth were more likely to give birth to underweight children. And if two mothers, one poor and one rich, were both low birth weight when they were born, it was the more well-off mother—with access to more resources—who was more likely to give birth to a baby who weighed more.

Expanding Medicaid in the '80s Improved Child Health

In asking what can be done to address such gaps, Currie pointed to a little-known period in the 1980s when Medicaid expanded eligibility for low-income pregnant women and children. 

Currie Schanzenbach
Janet Currie and Diane Whitmore Schanzenbach discuss their work.

In the late 1970s, only about 12% of all 18-to-44-year-old women were eligible for Medicaid. These women were mainly poor and minority. By the early 1990s, 43% of all women were potentially eligible in the event of pregnancy. Coverage for children also shot up from 20% to 50% between 1986 and 2004.

“Still today, between 40% and 50% of births in most states are paid for by the Medicaid program, which most people don't realize,” Currie noted. “This is a huge expansion of public health insurance to this particular group.”

A study on short-term impacts by Currie and MIT’s Jonathan Gruber finds that there were large, immediate reductions in infant mortality and increases in prenatal care. As these children grew up, scholars looked at their health when they were in their 20s and 30s.

More recent research shows “impressive” long-term effects, especially for the poorest mothers and children, Currie said. Overall, young adults whose mothers were covered by the Medicaid expansion were mentally and physically healthier (with fewer chronic conditions and hospitalizations) and more likely to graduate high school.

“We expanded health insurance for pregnant women, [and] I think it had tremendously positive effects for a whole cohort of people,” Currie said.

Better Child Health Improves Adult Outcomes

To pinpoint the extent to which the “huge increase” in U.S. public health insurance led to a substantial decrease in child deaths, Currie turned to her work with IPR economist Hannes Schwandt.

They compared health outcomes in the United States and Canada. While the two countries are similar, they differ in at least one major way: Canadians have had public health insurance since the 1970s.

Currie Lecture
Currie outlined the connection between mental health and academic outcomes.

In 1990, rich children in the U.S. and Canada had similar mortality rates, but mortality was much higher for poor U.S. children. Between 1990 and 2010, death rates for poor U.S. children fell significantly, bringing their rates much closer to those of poor children in Canada. None of the other age groups studied showed the same closing of the gap between higher U.S. and lower Canadian mortality rates.

Currie argued the study provides evidence that children with access to healthcare from the prenatal period through childhood live longer.

“But as an economist, somebody might ask me, well, do they earn more? Have we really improved their human capital in that sense?” Currie explained.

It appears they do earn more: She pointed to research using income tax data that discovered for each year a poor family received Medicaid, it increased their children’s’ earnings as adults. By the time they were 28 years old, they were paying about $1,700 more per year in taxes.

Improved Child Mental Health Increases Adult Well-Being

Returning to the evidence on mental health, Currie questioned whether some of the improvements seen in children’s earnings as adults could be due to improvements in mental health.

“Mental health is one of the most important determinants of adult outcomes, especially if you're looking at adults of working age,” Currie noted. “[Mental health problems] affect traits and skills that are useful in the labor market like somebody's focus, internal motivation, stress tolerance, and ability to get along with others.” 

Much of the evidence on mental health is self-reported, but Currie noted that the self-reports have been consistent over time with more than 10% of workers reporting that they had 10 or more days of poor mental health in the past month. More concretely, research shows that about 12% of emergency room visits had diagnosis codes for mental health issues like panic attacks.

Mental health problems often begin early, even in utero—as shown by studies like those done on children born to the Dutch Hunger Winter Families at the end of WWII—and they impact many later-life outcomes, including education, she said.

Janet Currie Lecture
Currie speaks with IPR economist Hannes Schwandt (left) and Emory economist Chris Karbownik, a former IPR research associate.

Her work shows that by middle school, children with mental health issues were more likely to have repeated a grade and be in special education and have lower math and reading scores.

“So, we know that we can damage kids in utero,” she said. “My question is, ‘Do we know that we can do something to make it better or prevent these kinds of problems?’”  

In a study with IPR associate Anna Chorniy in medical social sciences, Currie discovers that when mothers participated in Women, Infants, and Children (WIC), this supplemental nutrition program reduced the chances of their children developing attention deficient hyperactivity disorder (ADHD) or another mental health issue by ages 6–11.

But to many, child mental health seems to be getting worse as more and more children are diagnosed. Currie pointed to increases in screening and changes in the incentives doctors in Medicaid have to diagnosis mental health conditions in children as two possible reasons. Still, data on U.S. retail prescriptions for antidepressants, which show wide variation across the country, reveal how much remains to be done to improve and standardize treatments.

“Just as the U.S. can serve as a laboratory to see the effect of public health insurance, it's also a really good laboratory for understanding the effects of treatment given how much variation in treatment there is,” Currie said, as she urged more research on the topic.

“Child health, I hope I’ve convinced you, is an important form of human capital,” Currie said. “Healthier children earn more and live longer, healthier lives.”

Janet Currie is the Henry Putnam Professor of Economics and Public Affairs at Princeton University and co-directs the Center for Health and Wellbeing. She is also a member of the National Academy of Sciences, National Academy of Medicine, and American Academy of Art and Sciences.

Photo credits: Rob Hart. 

Published: December 12, 2019.