 unlikely to become law this year due to opposition from President Barack Obama, the next president could support and implement this type of agenda.
This brief reviews the research on the importance of health at birth as it relates to future economic outcomes and explains why childhood health is vital for a strong economy. The brief then discusses the importance of environment, health care, and nutrition programs, and examines how the cuts in the House budget would undermine childhood health and the economy.
Some of the most important programs for childhood health are often seen only as consumption, government spending, or regulation—as opposed to investments in the nation’s future. A pro-growth budget would recognize that causing permanent damage to a generation of children is detrimental for the future economy and that investing in healthier children yields substantial economic benefits in the long term.
Health at birth
Increasingly, economists are finding that a child’s health at birth can have a strong causal impact on how productive a worker he or she becomes as an adult and whether he or she joins the labor force at all.
One common measure of newborn health—children’s weight at birth—is highly correlated with test scores. Several studies find a causal relationship between low birth weights and future outcomes by comparing siblings and even twins—finding that children with lower birth weights complete less school; have worse test scores; are more likely to use disability programs; and end up earning lower wages than children with higher birth weights. One study based on twin data suggests that a 10 percent increase in birth weight raises full-time earnings by about 1 percent, making it about as valuable on the labor market as an additional quarter year of education. Another twin study–which found that higher birth weights raise children’s test scores—implies that three-quarters of the increase in earnings is explained by increases in cognitive skills.
The mortality rate is obviously another important measure of children’s health. A high mortality rate reflects negatively on the health of the overall population—including survivors—since it indicates poor overall conditions. This importance is dramatically illustrated by research showing that the narrowing of the black-white test score gap during the 1980s is best correlated with the decline in the mortality rate for black children as a result of the Civil Rights movement—specifically the integration of hospitals during the 1960s. The Civil Rights Act of 1964 and the Medicare Act of 1965 increased access to hospitals for black people living in the South and reduced deaths from pneumonia and diarrhea—both easily treated with adequate medical care—among young black children. Researchers used this reduction in the post-neonatal mortality rate as a proxy for overall early childhood health and found that it explained a significant increase in test scores when these children were in high school.
Measuring the economic impact of public policy
One of the most significant challenges in empirical research is separating causation from correlation. As a hypothetical example, a correlation between pollution and low birth weights does not necessarily prove that pollution causes low birth weights. This correlation might instead be the result of poor parents living in more polluted areas where housing is cheaper, and their children may have lower birth weights as a result of poverty. Pollution might not be causing low birth weights even though the two measures are correlated with each other if a third variable, such as poverty, is causing the variation in both birth weight and pollution in the surrounding environment.
Economists frequently measure the causal impact of environmental factors and public policy with natural experiments. These events approximate a classic laboratory experiment by exposing one group of people to a treatment while leaving a control group unaffected. For example, a study by Princeton University economist Janet Currie and University of California, Berkeley ec