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Contributions of Economics to Global Health Policy
An Example of Multidisciplinary Research
with Relevance for Global Health Issues
Outline of talk
• Quick primer on human capital theory
• An example of multidisciplinary research
– Knudsen et al. on early childhood development
• Also see AIDS in developing nations at
• What I have to offer
– appreciation for multidisciplinary research
• Past experience at HEW and IRP
• Director of Poverty Studies Interdisciplinary Minor
• Lessons of economic research are necessary but not
sufficient for the solution of social problems including
• What I don’t have to offer
– Original research on health issues
Economics and Health Issues
• Health issues are on economists’ radar screens
because they affect the development of
human capital (productive skills embodied in
humans) which in turn determines
– economic well-being of individuals, and
– in the aggregate, economic growth of countries
Human Capital Theory
The human capital perspective considers how
the productivity of people in market and
nonmarket situations is changed by
investments in education, skills, and
Gary Becker, “Economic Way of Looking at Life, ”
Accounting for Tastes, 1996.
Basic definitions and concepts
1. Human capital: the stock of knowledge, skills, aptitudes,
education, and training that an individual or a group of
2. Human capital can be acquired.
3. Acquiring human capital can be costly.
4. Investment in human capital can generate returns in the
form of higher earnings or an increase in the quality of
5. Investments are evaluated in terms of their net benefits:
• Decisions are based on a comparison of costs with expected
6. Human capital cannot be transferred generally.
Investments in Human Capital
Investment takes place in three stages:
1. In early childhood
• Parental and early schooling experiences influences
o Basic language and mathematical skills
o Attitudes toward learning
o General health and life expectancy
2. During teen and young adult years
• High school, vocational school, college
3. After entering the job market
• On-the-job training, post baccalaureate schooling
Human capital and economic growth
• Economic growth (GDP) is influenced not just
by quantities of labor and capital but also by
• Human capital is a critical component of the
wealth of individuals and nations:
– When the World Bank estimated the per capita
wealth of 92 nations, the U.S. ranked 1st: 23
percent of the wealth was natural and physical
capital (natural resources, buildings, and
machinery), and 77 percent was human capital.
Disadvantaged Young Children
Knudsen, Heckman, Cameron, and
The Public Policy Issue
• A growing fraction of the nation’s workforce will
consist of adults who were raised in
disadvantaged environments characterized by:
– Limited parent education
– Parental mental health problems
– Significant social deprivation or neglect
– Exposure to interpersonal violence
• What are the implications of this trend for the
individuals and the future success of the U.S.
Children in Poverty
• Number of children living in poverty has never
– 14 million children
• 1 in 5 children
• True for every racial category
– 1 in 10 white children
– 1 in 3 black children and Hispanic children
– 1 in 7 Asian children
– Black and Hispanic children are 3X as likely to live
in poverty than white
Over their childhoods
• Young children have highest poverty rates
– 1 in 6 children under age 6
• Poverty rates are higher when measured
– 1 in 3 children experienced poverty over the period
• Family environments have deteriorated in the
– More children born to teen mothers
– More Children living in single parent homes
• Source: www.census.gov
Issue Tackled by a
• Eric I. Knudsen, Professor of Neurobiology, Stanford University
• James J. Heckman, Professor of Economics at the University of
Chicago, , who shared the 2000 Nobel Memorial Prize in Economic
Sciences. He directs the Economics Research Center and the Center
for Social Program Evaluation at the Harris School.
• Judy L. Cameron, Professor of Psychiatry at the University of
Pittsburgh, professor of behavioral neuroscience and obstetrics &
gynecology at Oregon Health and Science University, and a Senior
Scientist at at the Oregon National Primate Research Center.
• Jack P. Shonkoff, Professor of Child Health and Development at the
Harvard School of Public Health and Harvard Graduate School of
Education, and founding director of the university-wide Center on
the Developing Child at Harvard University.
Results appear in:
• Knudsen, Eric I., Heckman, James J., Cameron,
Judy and Shonkoff, Jack P. (2006). "Building
America's Future Workforce: Economic,
Neurobiological and Behavioral Perspectives
on Investment in Human Skill Development,"
Proceedings of the National Academy of
Sciences. 103(27): 10155-10162.
What did they do?
• By conducting a cross-disciplinary examination
of independent research in economics,
developmental psychology, and neurobiology,
they discovered a striking convergence of four
core concepts that explain the effects of early
environment on the capacity for human skill
Effects of early environment
on capacity for human skill development
4 Core Concepts
1. Environments affect genetic expression mechanisms
a) Architecture of the brain
b) Process of skill formation
2. Mastery of job related skills and the underlying neural
pathways follow hierarchical rules in a bottom-up sequence
1. Cognitive, linguistic, social and emotional competencies are
interdependent and are shaped by the experiences of the
developing child in addition to innate ability
4. Human abilities are formed in a predictable sequence of
sensitive periods during which the development of neural
circuits are most plastic and optimally receptive.
Early experiences shape. . .
Gene expression and
Poverty Poisons the Brain
• “Toxic” stress hormone levels are higher in young
children from poor families
• Excessive levels of toxic hormones disrupt the
formation of synaptic connections between cells
in the developing brain—and even effect its
blood supply, and literally disrupt the brain
• Stress-management systems are compromised
increasing the risk of stress related physical and
mental illnesses well into the adult years.
• Departed from previous economic models of adult
productivity by recognizing :
– the importance of both cognitive and noncognitive abilities
(motivation, self-control, time preference) in explaining
schooling and academic success;
– Abilities are produced by genes and environments (moms are
– Childhood has more than one stage—early versus late.
– Skill formation is a lifetime process starting in the womb and
continuing throughout life.
• Families play a far more important role in developing skills
• There are multiple skills and multiple abilities that are
important for adult success.
Lessons from program evaluations
• Early investment facilitates the productivity of
later investment--Skill begets skill through a
• Early investments are not productive if they
are not followed up by later investments.
• Returns to investing early in the life cycle are
• Remediation of inadequate early investments
is difficult and very costly.
• “The most cost-effective strategy for
strengthening the future of American workforce is
to invest greater human and financial resources in
the social and cognitive environments of children
who are disadvantaged, beginning as early as
• Early childhood education is an economic
• Neglecting the early years creates an underclass
that is growing in the U.S.
Forms of Investment
• Health care programs
– Prenatal programs for disadvantaged moms
– Preventative well-baby visits
– Nutrition programs
• Parenting courses and other home interventions
– Harlem Children’s Zone Baby College
• Child development programs
– Halem Gems—all day pre-K .
Application of Findings Worldwide
• Number of poor children in the world: 1 billion (every second child)
• For the 1.9 billion children from the developing world, there are:
– 640 million without adequate shelter (1 in 3)
– 400 million with no access to safe water (1 in 5)
– 270 million with no access to health services (1 in 7)
– 510 million underweight or stunted (1 in 4)
• 15 million children orphaned due to HIV/AIDS (similar to the total children
population in Germany or United Kingdom)
• 121 million children are out of education worldwide
Another Example of Multi-disciplinary
Amsterdam Institute of International are
targeting Millennium Development Goal 6:
– By 2015 have halted and begun to reverse the
spread of HIV/AIDS.
– Fellows and research staff representing no fewer
than nine traditional disciplines
– Research on AIDS
Eric I. Knudsen
• Research Interests—the mechanisms of attention, learning and strategies
of information processing in the central auditory system of developing and
adult barn owls, using neurophysiological, pharmacological, anatomical
and behavioral techniques. Studies focus on the process of sound
localization. Sound localization is shaped powerfully by an animal's
auditory and visual experience. Experiments are being conducted to
elucidate developmental influences, extent and time course of this
learning process, and its dependence on visual feedback. The cellular
mechanisms that underlie this example of learning are being studied to
determine how experience adaptively alters the anatomical,
pharmacological and functional properties of the brain in developing and
adult animals. In addition, we study mechanisms of attention (gain control
of sensory responses) and the rules by which auditory and visual
information is combined into a single representation in the brain.
Techniques offered in this laboratory include acoustic stimulation,
extracellular recording, microstimulation, neuropharmacology,
immunohistochemistry, anatomical pathway tracing, and behavioral
James J. Heckman
• Heckman’s work has been devoted to the development of a scientific basis
for economic policy evaluation, with special emphasis on models of
individuals and disaggregarted groups, and to the problems and
possibilities created by heterogeneity, diversity, and unobserved
• He has developed a body of new econometric tools that address these
problems and possibilities. He established a strong causal effect of the
1964 Civil Rights Act on promoting African-American economic progress.
• He established that GEDs are not the equivalent of high school graduates
and perform only slightly better than high school dropouts who do not
• His recent research focuses on human development and lifecycle skill
formation, with a special emphasis on the economics of early childhood.
He is currently conducting new social experiments on early childhood
interventions and reanalyzing old experiments.
Judy L. Cameron
• Generally, Cameron’s studies the effects of stress from everyday life
on long-term health and is interested in the relationship between
physical health and mental health.
• Specifically, Dr. Cameron's laboratory studies the effects of various
physiological stresses (brief periods of undernutrition, moderate
exercise, and mild psychological stress) on neuronal activity in the
central nervous system. Studies utilize nonhuman primates as
experimental models and aim to understand how exposure to
common stresses impact on the brain and the systems it controls,
including reproductive function, emotion regulation, metabolic
regulatory systems and motor control. Experimental approaches
include physiological and pharmacological studies with chronically
instrumented animals, behavioral studies, identification of neural
circuits by immunocytochemical and in situ hybridization
technologies, and genetic studies.
Jack P. Shonkoff
• Jack P. Shonkoff, M.D., chairs the National
Scientific Council on the Developing Child, a
multi-university collaboration comprising leading
scholars in neuroscience, developmental
psychology, pediatrics, and economics, whose
mission is to bring sound and accurate science to
bear on public decision-making affecting the lives
of young children. He is an academic pediatrician
whose work focuses on early childhood health
and development and the interactions among
research, policy, and practice.