Quasi-Experiments in Health and Environmental Economics

University Of Maryland, College Park, College Park MD

Investigators

Abstract

This project uses exogenous variation generated by quasi experiments to isolate some important relationships in health economics. The following two broad questions are examined: What is the impact of income on mortality? A large body of literature that spans many disciplines has established that those with lower incomes have poorer health outcomes and higher mortality rates. However it has been difficult isolating income as the causal element in this relationship. This project uses what is frequently termed the "benefits notch" in Social Security as an exogenous source of variation in the income for the elderly. Concerned with rapidly increasing benefit payments, in 1977, the Federal government changed the way benefits were calculated for new beneficiaries, substantially decreasing payments for recipients born after December 31, 1916. As a result of these changes, two people with identical life histories but different birth dates would receive very different retirement incomes. The project plans to compare mortality rates for people born in the last quarter of 1916 and the first quarter of 1917. If income does impact mortality, there should be elevated death rates among those with lower monthly benefits. The notch experiment is an excellent opportunity to examine the income/mortality link for four reasons. First, the benefits notch reduced monthly payments by a substantial amount. Second, mortality rates in the impacted groups are relatively high, making it easier to detect an impact of income on mortality if one exists. Third, the incomes of the elderly are routinely changed by the Federal government and subsequently, there may be important policy implications if income causally impacts mortality. Fourth, for narrowly defined cohorts, the notch benefits appear to be close to randomly assigned in that workers born just before and after the notch had identical observed characteristics prior to the passage of the legislation establishing benefit differences. What are the benefits of prenatal care? While it is easy to establish that women with more prenatal care visits have better birth outcomes, it is hard to attribute all of these differences to prenatal care. Women who would otherwise have an uneventful pregnancy (married, older, more educated mothers, for example) also have the highest prenatal care use. Because of the potential omitted variables bias, constructing a convincing test that can falsify or confirm the link between care and outcomes has proven to be difficult. This research program uses field variation in prenatal care visits to isolate the benefits of prenatal care. Black women and city residents rely heavily on public transportation to get to health care providers. Shocks in the access to transportation can therefore be used as a way to isolate the impact of reduced prenatal care. A number of possible quasi experiments can be used in this context including public transportation strikes in Allegheny County (Pittsburgh) and Philadelphia. Preliminary evidence from Pittsburgh suggests that women pregnant at the time of the strike had substantially lower prenatal care visits than women pregnant at other times. If prenatal care improves birth outcomes, then the reduction in visits generated by strikes should produce worse birth outcomes.