Population aging, the combined effect of declining fertility and rising life expectancy, is one of the fundamental trends observed in developed counties and, increasingly, in developing countries as well. A key aspect of the aging process is the decline of cognitive ability. Cognitive aging is an important and complex phenomenon, and its risk factors and economic consequences are still not well understood. For instance, the relationship between cognitive aging and productivity matters for long-term economic growth. Cognitive functioning is also crucial for decision-making because it influences individuals’ ability to process information and to make the right choices, and older individuals are increasingly required to make complex financial, health, and long-term-care decisions that might affect their health, resources, and welfare. This article presents evidence from economics and other fields that have investigated this phenomenon from different perspectives.
A common empirical finding is the hump-shaped profile of cognitive performance over the life cycle. Another is the large variability of observed age profiles, not only at the individual level but also across sociodemographic groups and countries. The age profiles of cognitive performance also vary depending on the cognitive task considered, reflecting the different combinations of cognitive skills that they require. The literature usually distinguishes between two main types of cognitive skills: fluid intelligence and crystallized intelligence. The first consists of the basic mechanisms of processing new information, while the second reflects acquired knowledge. Unlike fluid intelligence, which declines rapidly as people get older, crystallized intelligence tends to be maintained at older ages. Differences in the age profiles of cognitive performance across tasks partly reflect differences in the importance of these two types of intelligence. For instance, tasks where learning, problem-solving, and processing speed are essential tend to be associated with a faster decline, while tasks where experience matters more tend to be associated with a slower decline. Various life events and behaviors over the life cycle also contribute to the large heterogeneity in the observed age profiles of cognitive performance. This source of variation includes not only early-life events and investments (e.g., formal education), but also midlife and later-life events (e.g., health shocks) and individual choices (e.g., health behaviors or retirement).
From an economic viewpoint, cognitive abilities may be regarded as one dimension of human capital, along with education, health, and noncognitive abilities. Economists have mainly focused their attention on human capital accumulation, and much less so on human capital deterioration. One explanation is that early-life investments appears to be more profitable than investments later in life. However, recent evidence from neuropsychology suggests that the human brain is malleable and open to enhancement even later in adulthood. Therefore, more economic research is needed to study how human capital depreciates over the life cycle and whether cognitive decline can be controlled.
101-120 of 376 Results
Article
The Economics of Cognitive Aging
Fabrizio Mazzonna and Franco Peracchi
Article
The Economics of Copyright Law and Problems With Its Implementation
Jeffrey L. Harrison
Without copyright law, authors would be unable to internalize the benefits of their writings. Copyright law reacts to this by providing authors with a period of exclusivity. The relevant legislation has a contract-like character; authors receive a period of exclusivity, and the public benefits by virtue of original writings that eventually pass into the public domain. Ideally each contract between the public and an author would be individually negotiated. Because U.S. copyright law is strictly utilitarian, authors would be “paid” the lowest amount possible to bring their works into existence. For example, popular authors may be able to internalize sufficient returns in just a few years. In other cases, a longer period of exclusivity is necessary. Huge transaction costs prohibit individual transactions and, at this writing, most works are protected for the life of the author plus 70 years.
As an economic matter, the actual implementation of copyright law is hard to rationalize. Works with even a modicum of creativity are copyrightable. This can result in a disincentive to be creative and invites expensive legal disputes about works that are socially irrelevant. In addition, works receive levels of protection that are independent of their value to the public. In some instances Congress with the approval of the Supreme Court has extended the copyright term for works already in existence. Retroactive extension of the copyright term cannot have an impact on works in existence. Oddly, copyright law views authors as profit maximizers but also limits the value of their works by allowing heirs to terminate assignments after a set period of time. Finally, the remedy for copyright infringement is the damages suffered by the author plus all profits made by the infringer that can be traced to the infringement. It is not clear that this remedy is consistent with the goals of copyright law.
Article
The Economics of Diet and Obesity: Public Policy
Fabrice Etilé
The rise in obesity and other food-related chronic diseases has prompted public-health officials of local communities, national governments, and international institutions to pay attention to the regulation of food supply and consumer behavior. A wide range of policy interventions has been proposed and tested since the early 21st century in various countries. The most prominent are food taxation, health education, nutritional labeling, behavioral interventions at point-of-decision, advertising, and regulations of food quality and trade. While the standard neoclassical approach to consumer rationality provides limited arguments in favor of public regulations, the recent development of behavioral economics research extends the scope of regulation to many marketing practices of the food industry. In addition, behavioral economics provides arguments in favor of taxation, easy-to-use front-of-pack labels, and the use of nudges for altering consumer choices. A selective but careful review of the empirical literature on taxation, labeling, and nudges suggests that a policy mixing these tools may produce some health benefits. More specifically, soft-drink taxation, front-of-pack labeling policies, regulations of marketing practices, and eating nudges based on affect or behavior manipulations are often effective methods for reducing unhealthy eating.
The economic research faces important challenges. First, the lack of a proper control group and exogenous sources of variations in policy variables make evaluation very difficult. Identification is challenging as well, with data covering short time periods over which markets are observed around slowly moving equilibria. In addition, truly exogenous supply or demand shocks are rare events. Second, structural models of consumer choices cannot provide accurate assessment of the welfare benefits of public policies because they consider perfectly rational agents and often ignore the dynamic aspects of food decisions, especially consumer concerns over health. Being able to obtain better welfare evaluation of policies is a priority. Third, there is a lack of research on the food industry response to public policies. Some studies implement empirical industrial organization models to infer the industry strategic reactions from market data. A fruitful avenue is to extend this approach to analyze other key dimensions of industrial strategies, especially decisions regarding the nutritional quality of food. Finally, the implementation of nutritional policies yields systemic consequences that may be underestimated. They give rise to conflicts between public health and trade objectives and alter the business models of the food sector. This may greatly limit the external validity of ex-ante empirical approaches. Future works may benefit from household-, firm-, and product-level data collected in rapidly developing economies where food markets are characterized by rapid transitions, the supply is often more volatile, and exogenous shocks occur more frequently.
Article
The Economics of Diet and Obesity: Understanding the Global Trends
Fabrice Etilé and Lisa Oberlander
In the last several decades obesity rates have risen significantly. In 2014, 10.8% and 14.9% of the world’s men and women, respectively, were obese as compared with 3.2% and 6.4% in 1975. The obesity “epidemic” has spread from high-income countries to emerging and developing ones in every region of the world. The rising obesity rates are essentially explained by a rise in total calorie intake associated with long-term global changes in the food supply. Food has become more abundant, available, and cheaper, but food affluence is associated with profound changes in the nutritional quality of supply. While calories have become richer in fats, sugar, and sodium, they are now lower in fiber. The nutrition transition from starvation to abundance and high-fat/sugar/salt food is thus accompanied by an epidemiological transition from infectious diseases and premature death to chronic diseases and longer lives. Food-related chronic diseases have important economic consequences in terms of human capital and medical care costs borne by public and private insurances and health systems.
Technological innovations, trade globalization, and retailing expansion are associated with these substantial changes in the quantity and quality of food supply and diet in developed as well as in emerging and rapidly growing economies. Food variety has significantly increased due to innovations in the food production process. Raw food is broken down to obtain elementary substances that are subsequently assembled for producing final food products. This new approach, as well as improvements in cold chain and packaging, has contributed to a globalization of food chains and spurred an increase of trade in food products, which, jointly with foreign direct investments, alters the domestic food supply. Finally, technological advancements have also favored the emergence of large supermarkets and retailers, which have transformed the industrial organization of consumer markets.
How do these developments affect population diets and diet-related diseases? Identifying the contribution of supply factors to long-term changes in diet and obesity is important because it can help to design innovative, effective, and evidence-based policies, such as regulations on trade, retailing, and quality or incentives for product reformulation. Yet this requires a correct evaluation of the importance and causal effects of supply-side factors on the obesity pandemic. Among others, the economic literature analyzes the effect of changes in food prices, food availability, trade, and marketing on the nutrition and epidemiological transitions. There is a lack of causal robust evidence on their long-term effects. The empirical identification of causal effects is de facto challenging because the dynamics of food supply is partly driven by demand-side factors and dynamics, like a growing female labor force, habit formation, and the social dynamics of preferences.
There are several important limitations to the literature from the early 21st century. Existing studies cover mostly well-developed countries, use static economic and econometric specifications, and employ data that cover short periods of time unmarked by profound shifts in food supply. In contrast, empirical research on the long-term dynamics of consumer behavior is much more limited, and comparative studies across diverse cultural and institutional backgrounds are almost nonexistent. Studies on consumers in emerging countries could exploit the rapid time changes and large spatial heterogeneity, both to identify the causal impacts of shocks on supply factors and to document how local culture and institutions shape diet and nutritional outcomes.
Article
The Economics of Early Interventions Aimed at Child Development
Samuel Berlinski and Marcos Vera-Hernández
A set of policies is at the center of the agenda on early childhood development: parenting programs, childcare regulation and subsidies, cash and in-kind transfers, and parental leave policies. Incentives are embedded in these policies, and households react to them differently. They also have varying effects on child development, both in developed and developing countries. We have learned much about the impact of these policies in the past 20 years. We know that parenting programs can enhance child development, that centre based care might increase female labor force participation and child development, that parental leave policies beyond three months don’t cause improvement in children outcomes, and that the effects of transfers depend much on their design. In this review, we focus on the incentives embedded in these policies, and how they interact with the context and decision makers to understand the heterogeneity of effects and the mechanisms through which these policies work. We conclude by identifying areas of future research.
Article
The Economics of End-of-Life Spending
Hans Olav Melberg
End-of-life spending is commonly defined as all health costs in the 12 months before death. Typically, the costs represent about 10% of all health expenses in many countries, and there is a large debate about the effectiveness of the spending and whether it should be increased or decreased. Assuming that health spending is effective in improving health, and using a wide definition of benefits from end-of-life spending, several economists have argued for increased spending in the last years of life. Others remain skeptical about the effectiveness of such spending based on both experimental evidence and the observation that geographic within-country variations in spending are not correlated with variations in mortality.
Article
The Economics of Families and Health
Susan Averett and Jennifer Kohn
An individual’s health is produced in large part by family investments that start before birth and continue to the end of life. The health of an individual is intertwined with practically every economic decision including education, marriage, fertility, labor market, and investments. These outcomes in turn affect income and wealth and hence have implications for intergenerational transfer of economic advantage or disadvantage. A rich body of theoretical and empirical work considers the role of the family in health production over the life cycle and the role of health in household economic decisions. This literature starts by considering family inputs regarding health at birth, then moves through adolescence and midlife, where relationship decisions affect health. After midlife, health, particularly the health of family members, becomes an input into retirement and investment decisions. The literature on family and health showcases economists’ skills in modeling complex family dynamics, deriving theoretical predictions, and using clever econometric strategies to identify causal effects.
Article
The Economics of Infectious Diseases
Katharina Hauck
Economics can make immensely valuable contributions to our understanding of infectious disease transmission and the design of effective policy responses. The one unique characteristic of infectious diseases makes it also particularly complicated to analyze: the fact that it is transmitted from person to person. It explains why individuals’ behavior and externalities are a central topic for the economics of infectious diseases. Many public health interventions are built on the assumption that individuals are altruistic and consider the benefits and costs of their actions to others. This would imply that even infected individuals demand prevention, which stands in conflict with the economic theory of rational behavior. Empirical evidence is conflicting for infected individuals. For healthy individuals, evidence suggests that the demand for prevention is affected by real or perceived risk of infection. However, studies are plagued by underreporting of preventive behavior and non-random selection into testing. Some empirical studies have shown that the impact of prevention interventions could be far greater than one case prevented, resulting in significant externalities. Therefore, economic evaluations need to build on dynamic transmission models in order to correctly estimate these externalities. Future research needs are significant. Economic research needs to improve our understanding of the role of human behavior in disease transmission; support the better integration of economic and epidemiological modeling, evaluation of large-scale public health interventions with quasi-experimental methods, design of optimal subsidies for tackling the global threat of antimicrobial resistance, refocusing the research agenda toward underresearched diseases; and most importantly to assure that progress translates into saved lives on the ground by advising on effective health system strengthening.
Article
The Economics of Informal Care
Courtney Van Houtven, Fiona Carmichael, Josephine Jacobs, and Peter C. Coyte
Across the globe, the most common means of supporting older disabled adults in their homes is through “informal care.” An informal carer is a family member or friend, including children or adults, who help another person because of their illness, frailty, or disability. There is a rich economics literature on the direct benefits of caregiving, including allowing the care recipient to remain at home for longer than if there was no informal care provided. There is also a growing literature outlining the associated costs of care provision. Although informal care helps individuals with disabilities to remain at home and is rewarding to many carers, there are often negative effects such as depression and lost labor market earnings that may offset some of these rewards. Economists have taken several approaches to quantify the net societal benefit of informal care that consider the degree of choice in caregiving decisions and all direct and indirect benefits and costs of informal care.
Article
The Economics of Long-Term Care
Norman Bannenberg, Martin Karlsson, and Hendrik Schmitz
Long-term care (LTC) is arguably the sector of the economy that is most sensitive to population aging: its recipients are typically older than 80 years whereas most care providers are of working age. Thus, a number of ongoing societal trends interact in the determination of market outcomes in the LTC sector: trends in longevity and healthy life expectancy interact with changing family structures and norms in shaping the need for services. The supply side is additionally affected by changes in employment patterns, in particular regarding the transition into retirement, as well as by cross-regional imbalances in demographic and economic conditions. The economic literature on long-term care considers many of these issues, aims at understanding this steadily growing sector, and at guiding policy. Key economic studies on long-term care address determinants of the demand for long-term care, like disability and socio-economic status; the two most important providers: informal family caregivers and nursing homes; and the financing and funding of LTC.
Article
The Economics of Malaria Prevention
Bénédicte Apouey, Gabriel Picone, and Joshua Wilde
Malaria is a potentially life-threatening disease transmitted through the bites of female anopheline mosquitos infected with protozoan parasites. Malaria remains one of the major causes of mortality by infectious disease: in 2015, there were an estimated 212 million cases and 429,000 deaths globally, according to the 2016 World Malaria Report. Children under 5 years in sub-Saharan Africa bear the greatest burden of the disease worldwide.
However, most of these cases could be prevented or treated. Several methods are highly effective in preventing malaria: in particular, sleeping under an insecticide-treated mosquito net (ITN), indoor residual spraying (IRS), and taking intermittent preventive treatment for pregnant women (IPTp). Regarding treatment, artesiminin-based combination therapy (ACT) is recommended as first-line treatment in many countries.
Compared with other actions, malaria prevention behaviors have some specific features. In particular, they produce public health externalities. For example, bed net usage creates positive externalities since bed nets not only directly protect the user, but also reduce transmission probabilities through reduction in the number of disease hosts, and in the case of ITNs, reduction of the vector itself. In contrast, ACT uptake creates both positive externalities when individuals with malaria are treated, and negative externalities in the case of overtreatment that speeds up the spread of long-run parasite resistance. Moreover, ITNs, IPTp, and ACTs are experience goods (meaning individuals only ascertain their benefits upon usage), which implies that current preventive actions are linked to past preventive behaviors.
Malaria prevention and eradication produce unambiguous benefits across various domains: economic conditions, educational outcomes, survival, fertility, and health. However, despite the high private returns to prevention, the adoption of antimalarial products and behaviors remains relatively low in malaria-affected areas.
A variety of explanations have been proposed for low adoption rates, including financial constraints, high prices, and absence of information. While recent studies highlight that all of these factors play a role, the main barrier to adoption is probably financial constraints. This finding has implications regarding the appropriate pricing policy for these health products. In addition, there is a shortage of causally identified research on the effect of cultural and psychological barriers to the adoption of preventive behaviors. The literature which does exist is from a few randomized control trials of few individuals in very specific geographic and cultural contexts, and may not be generalizable. As a result, there are still ample opportunities for research on applying the insights of behavioral economics to malaria-preventive behavior in particular. Moreover, little research has been done on the supply side, such as whether free or heavily subsidized distribution of prevention technologies is fiscally sustainable; finding effective methods to solve logistical problems which lead to shortages and ineffective alternative treatments to fill the gap; or training sufficient healthcare workers to ensure smooth and effective delivery. Given these gaps in the literature, there are still multiple fruitful avenues for research which may have a first-order effect on reducing the prevalence of malaria in the developing world.
Article
Economics of Rural–Urban Migration
Pei-Ju Liao and Chong Kee Yip
In the past century, many developing countries have experienced rapid economic development, which is usually associated with a process of structural transformation and urbanization. Rural–urban migration, shifting the labor force from less productive agricultural sectors to more productive industrial sectors in cities, plays an important role in the growth process and thus has drawn economists’ attention. For instance, it is recognized that one of the important sources of China’s growth miracle is rural–urban migration.
At the early stage of economic development, an economy usually relies on labor-intensive industries for growth. Rural–urban migrants thus provide the necessary labor force to urban production. Since they are more productive in industrial sectors than in agricultural sectors, aggregate output increases and economic growth accelerates. In addition, abundant migrants affect the rates of return to capital by changing the capital–labor ratio. They also change the skill composition of the urban labor force and hence the relative wage of skilled to unskilled workers. Therefore, rural–urban migration has wide impacts on growth and income distribution of the macroeconomy.
What are the forces that drive rural–urban migration? It is well understood that cities attract rural migrants because of better job opportunities, better career prospects, and higher wages. Moreover, enjoying better social benefits such as better medical care in cities is another pull factor that initiates rural–urban migration. Finally, agricultural land scarcity in the countryside plays an important role on the push side for moving labor to cities.
The aforementioned driving forces of rural–urban migration are work-based. However, rural–urban migration could be education-based, which is rarely discussed in the literature. In the past decade, it has been proposed that cities are the places for accumulating human capital in work. It is also well established that most of the high-quality education institutions (including universities and specialized schools for art and music) are located in urban areas. A youth may first move to the city to attend college and then stay there for work after graduation. From this point of view, work-based migration does not paint the whole picture of rural–urban migration. In this article, we propose a balanced view that both the work-based and education-based channels are important to rural–urban migration. The migration story could be misleading if any of them is ignored.
Article
The Economics of Smoking Prevention
Philip DeCicca, Donald S. Kenkel, Michael F. Lovenheim, and Erik Nesson
Smoking prevention has been a key component of health policy in developed nations for over half a century. Public policies to reduce the physical harm attributed to cigarette smoking, both externally and to the smoker, include cigarette taxation, smoking bans, and anti-smoking campaigns, among other publicly conceived strategies to reduce smoking initiation among the young and increase smoking cessation among current smokers. Despite the policy intensity of the past two decades, there remains debate regarding whether, and to what extent, the observed reductions in smoking are due to such policies. Indeed, while smoking rates in developed countries have fallen substantially over the past half century, it is difficult to separate secular trends toward greater investment in health from actual policy impacts. In other words, smoking rates might have declined in the absence of these anti-smoking policies, consistent with trends toward other healthy behaviors. These trends also may reflect longer-run responses to policies enacted many years ago, which also poses challenges for identification of causal policy effects. While smoking rates fell dramatically over this period, the gradient in smoking prevalence has become tilted toward lower socioeconomic status (SES) individuals. That is, cigarette smoking exhibited a relatively flat SES gradient 50 years ago, but today that gradient is much steeper: relatively less-educated and lower-income individuals are many times more likely to be cigarette smokers than their more highly educated and higher-income counterparts. Over time, consumers also have become less price-responsive, which has rendered cigarette taxation a less effective policy tool with which to reduce smoking. The emergence of tax avoidance strategies such as casual cigarette smuggling (e.g., cross-tax border purchasing) and purchasing from tax-free outlets (e.g., Native reservations in Canada and the United States) have likely contributed to reduced price sensitivity. Such behaviors have been of particular interest in the last decade as cigarette taxation has roughly doubled cigarette prices in many developed nations, creating often large incentives to avoid taxation for those who continue to smoke. Perhaps due to the perception that traditional policy has been ineffective, recent anti-smoking policy has focused more on the direct regulation of cigarettes and smoking behavior. The main non-price-based policy has been the rise of smoke-free air laws, which restrict smoking behavior in workplaces, restaurants, and bars. These regulations can reduce smoking prevalence and exposure to secondhand smoke among nonsmokers. However, they may also shift the location of smoking in ways that increase secondhand smoke exposure, particularly among children. Other non-tax regulations focus on the packaging (e.g., the movement towards plain packaging), advertising, and product attributes of cigarettes (e.g., nicotine content, cigarette flavor, etc.), and most are attempts to reduce smoking by making it less desirable to the actual or potential smoker. Perhaps not surprisingly, research in the economics of smoking prevention has followed these policy developments, though strong interest remains in both the evaluation of price- and non-price policies as well as any offsetting responses among smokers that may undermine the effectiveness of these regulations. While the past two decades have provided fertile ground for research in the economics of smoking, we expect this to continue, as governments search for more innovative and effective ways to reduce smoking.
Article
Economic Studies on the Opioid Crisis: Costs, Causes, and Policy Responses
Johanna Catherine Maclean, Justine Mallatt, Christopher J. Ruhm, and Kosali Simon
The United States has experienced an unprecedented crisis related to the misuse of and addiction to opioids. As of 2018, 128 Americans die each day of an opioid overdose, and total economic costs associated with opioid misuse are estimated to be more than $500 billion annually. The crisis evolved in three phases, starting in the 1990s and continuing through 2010 with a massive increase in use of prescribed opioids associated with lax prescribing regulations and aggressive marketing efforts by the pharmaceutical industry. A second phase included tightening restrictions on prescribed opioids, reformulation of some commonly misused prescription medications, and a shift to heroin consumption over the period 2010 to 2013. Since 2013, the third phase of the crisis has included a movement toward synthetic opioids, especially fentanyl, and a continued tightening of opioid prescribing regulations, along with the growth of both harm reduction and addiction treatment access policies, including a possible 2021 relaxation of buprenorphine prescribing regulations.
Economic research, using innovative frameworks, causal methods, and rich data, has added to our understanding of the causes and consequences of the crisis. This body of research identifies intended and unintended impacts of policies designed to address the crisis. Although there is general agreement that the causes of the crisis include a combination of supply- and demand-side factors, and interactions between them, there is less consensus regarding the relative importance of each. Studies show that regulations can reduce opioid prescribing but may have less impact on root causes of the crisis and, in some cases, have spillover effects resulting in greater use of more harmful substances obtained in illicit markets, where regulation is less possible. There are effective opioid use disorder treatments available, but access, stigma, and cost hurdles have stifled utilization, resulting in a large degree of under-treatment in the United States.
How challenges brought about by the COVID-19 pandemic may intersect with the opioid crisis is unclear. Emerging areas for future research include understanding how societal and health care systems disruptions affect opioid use, as well as which regulations and policies most effectively reduce potentially inappropriate prescription opioid use and illicit opioid sources without unintended negative consequences.
Article
Economic Theory of Criminal Law
Keith N. Hylton
Criminal law consists of substantive and procedural parts. Substantive law is the set of rules defining conduct that violates the law. Procedural criminal law is the set of rules regulating the process of punishment. Substantive rules apply mostly to individual actors, and procedural rules apply to public enforcement agencies and adjudicators.
Economic theory of criminal law consists of normative and positive parts. Normative economic theory, which began with writings by Beccaria and Bentham, aims to recommend an ideal criminal punishment scheme. Positive economic theory, which appeared later in writings by Holmes and Posner, aims to justify and to better understand the criminal law rules that exist. Since the purpose of criminal law is to deter socially undesirable conduct, economic theory, which emphasizes incentives, would appear to be an important perspective from which to examine criminal law.
Positive economic theory, applied to substantive criminal law, seeks to explain and to justify criminal law doctrine in economic terms—that is, in terms that emphasize the incentive effects created by the law. The positive economic theory of criminal law literature can be divided into three phases: Classical deterrence theory, neoclassical deterrence, and modern synthesis. The modern synthesis provides a rationale for fundamental criminal law doctrines and also more puzzling portions of the law such as the doctrines of intent and necessity. Positive economic theory also provides a rationale for the allocation of enforcement responsibilities.
Article
Education and Economic Growth
Eric A. Hanushek and Ludger Woessmann
Economic growth determines the future well-being of society, but finding ways to influence it has eluded many nations. Empirical analysis of differences in growth rates reaches a simple conclusion: long-run growth in gross domestic product (GDP) is largely determined by the skills of a nation’s population. Moreover, the relevant skills can be readily gauged by standardized tests of cognitive achievement. Over the period 1960–2000, three-quarters of the variation in growth of GDP per capita across countries can be accounted for by international measures of math and science skills. The relationship between aggregate cognitive skills, called the knowledge capital of a nation, and the long-run growth rate is extraordinarily strong.
There are natural questions about whether the knowledge capital–growth relationship is causal. While it is impossible to provide conclusive proof of causality, the existing evidence makes a strong prima facie case that changing the skills of the population will lead to higher growth rates.
If future GDP is projected based on the historical growth relationship, the results indicate that modest efforts to bring all students to minimal levels will produce huge economic gains. Improvements in the quality of schools have strong long-term benefits.
The best way to improve the quality of schools is unclear from existing research. On the other hand, a number of developed and developing countries have shown that improvement is possible.
Article
Education and Social Mobility
Helena Holmlund and Martin Nybom
Family background is a strong determinant of an individual’s educational achievement and labor market success. Using an economics framework, intergenerational persistence in socioeconomic status can be explained by a variety of factors, including parental investment behavior, credit constraints, and the degree of inequality in society. Genetic transmission from parents to children may also play a role. In addition, the skill formation process is governed by dynamics between different stages of a child’s life, such as complementarities between early and late investments or between informal and formal education.
Education policy holds the promise of breaking the strong ties between family background and socioeconomic position by providing publicly accessible education for children of all backgrounds. However, the education system may also perpetuate social inequalities if well-off families are able to protect their children from downward mobility by, for example, moving to neighborhoods with high-quality schools and by providing networks that offer opportunities to succeed.
However, a growing number of studies show that educational interventions can have long-lasting effects on students’ outcomes, in particular for disadvantaged students, and that they can be cost-effective. For example, reducing class size, increasing general education spending, tutoring, and improving teacher quality are policy levers that are shown to be successful in this regard. Shifting from selective to comprehensive school systems is also a policy that enhances equality of opportunity. While the evidence on credit constraints and their role for access to higher education is evolving, but still mostly U.S. focused and largely inconclusive, it is a key domain for shaping social mobility given the life-changing impacts that a university degree can have.
Article
Effectiveness and Availability of Treatment for Substance Use Disorders
Dominic Hodgkin and Hilary S. Connery
Drug and alcohol use disorders, also called substance use disorders (SUD), are among the major health problems facing many countries, contributing a substantial burden in terms of mortality, morbidity, and economic impact. A considerable body of research is dedicated to reducing the social and individual burden of SUD.
One major focus of research has been the effectiveness of treatment for SUD, with studies examining both medication and behavioral treatments using randomized, controlled clinical trials. For opioid use disorder, there is a strong evidence base for medication treatment, particularly using agonist therapies (i.e., methadone and buprenorphine), but mixed evidence regarding the use of psychosocial interventions. For alcohol use disorder, there is evidence of modest effectiveness for two medications (acamprosate and naltrexone) and for various psychosocial treatments, especially for less severe alcohol use disorder syndromes. An important area for future research is how to make treatment more appealing to clients, given that client reluctance is an important contributor to the low utilization of effective treatments.
A second major focus of research has been the availability of medication treatments, building on existing theories of how innovations diffuse, and on the field of dissemination and implementation research. In the United States, this research identifies serious gaps in both the availability of SUD treatment programs and the availability of effective treatment within those programs. Key barriers include lack of on-site medical staff at many SUD treatment programs; restrictive policies of private insurers, states, and federal authorities; and widespread skepticism toward medication treatment among counseling staff and some administrators. Emerging research is promising for providing medication treatment in settings other than SUD treatment programs, such as community mental health centers, prisons, emergency departments, and homeless shelters.
There is still considerable room to make SUD treatment approaches more effective, more available, and—most importantly—more acceptable to clients.
Article
The Effect of Education on Health and Mortality: A Review of Experimental and Quasi-Experimental Evidence
Titus Galama, Adriana Lleras-Muney, and Hans van Kippersluis
Education is strongly associated with better health and longer lives. However, the extent to which education causes health and longevity is widely debated. We develop a human capital framework to structure the interpretation of the empirical evidence and review evidence on the causal effects of education on mortality and its two most common preventable causes: smoking and obesity. We focus attention on evidence from randomized controlled trials, twin studies, and quasi-experiments. There is no convincing evidence of an effect of education on obesity, and the effects on smoking are only apparent when schooling reforms affect individuals’ track or their peer group, but not when they simply increase the duration of schooling. An effect of education on mortality exists in some contexts but not in others and seems to depend on (i) gender, (ii) the labor market returns to education, (iii) the quality of education, and (iv) whether education affects the quality of individuals’ peers.
Article
The Effect of Government Policy on Pharmaceutical Drug Innovation
Ayman Chit and Paul Grootendorst
Drug companies are profit-maximizing entities, and profit is, by definition, revenue less cost. Here we review the impact of government policies that affect sales revenues earned on newly developed drugs and the impact of policies that affect the cost of drug development. The former policies include intellectual property rights, drug price controls, and the extension of public drug coverage to previously underinsured groups. The latter policies include regulations governing drug safety and efficacy, R&D tax credits, publicly funded basic research, and public funding for open drug discovery consortia.
The latter policy, public funding of research consortia that seek to better understand the cellular pathways through which new drugs can ameliorate disease, appears very promising. In particular, a better understanding of human pathophysiology may be able to address the high failure rate of drugs undergoing clinical testing. Policies that expand market size by extending drug insurance to previously underinsured groups also appear to be effective at increasing drug R&D. Expansions of pharmaceutical intellectual property rights seem to be less effective, given the countervailing monopsony power of large public drug plans.
