Working Paper - Dov Chernichovsky

Abstract

By studying intergenerational benefits from children, this paper shows that the economic analysis of fertility behavior in developing economics can provide a systematic discussion of this behavior. The major hypotheses set forth are: 1) the effect of income on fertility depends on the source and timing of income; 2) in a lifetime context, parents, or would-be parents, who have higher incomes at young ages compared with the income they anticipate at old age, are expected to have a higher demand for children; and 3) the reverse of the latter is predicted for parents who anticipate relatively higher incomes at old age. These hypotheses follow the idea that, in the absence of other appropriate means for intertemporal transfers of wealth, parents even out the lifetime welfare through fertility behavior. Under these circumstances, fertility rates are expected to increase in communities where children abandon their traditional commitments to their aging parents, as may happen during periods of economic and cultural transition. A decline in mortality rates will induce lower fertility. This model suggests that a tax-financed social security scheme along with family planning will be conducive to a reduction in fertility. A test on data from an Indian village in 1968-69 suggests that in a traditional setting there is a correlation between household welfare, measured by income or assets, and the presence of grown children. Income has a positive effect on fertility when the parents' incomes comes from labor rather than human and nonhuman capital which provides income at later stages of life. Longitudinal data depicting income, savings, and fertility patterns over time should prove more promising in exploring the issues discussed.

The purpose of this paper is to investigate the extent to which family income and education are obstacles to the provision of adequate diets for young children in the United States. An examination of the Health and Nutrition Examination Survey reveals the following: 1. Average nutrient intakes of young children are well above recommended dietary standards, with the exception of iron. 2. Average nutrient intakes for children in households of lower economic status are very similar to intakes of children in households of higher economic status. Rates of children's growth are also similar in these households. 3. Family income and education of the household head have statistically significant but very small positive effects on the nutrient intake levels of young children. 4. There are substantial effects of protein intakes on children's height and head growth, even though protein is consumed in excess of dietary standards. This finding and the apparent correlation between children's growth and their intellectual development brings to question the adequacy of present protein standards. Could American mothers, who provide very high protein diets for their children in households at all levels of socioeconomic status know more about what constitutes an adequate diet for their children than the experts do?

In this paper we analyze the choice of diet for young children in low income families in the United States and its relation to the children's growth. Our most important finding is that the education and income levels in low income households are generally sufficient for the provision of adequate diets for children in the household. This conclusion is based on empirical results which show that low income parents have pushed the growth of their children through choice of diet nearly as much as possible, and which also show that mother's education and family income are insignificant determinants of the nutrient intakes of children in low income households.

The conventional wisdom is that because at any time the aged cost more than the young, there is a positive relationship between aging and health care spending. It is hard, however, to find evidence that aging correlates positively with such spending. Intrigued by the puzzle, we account for the factors that contribute to changes of the age distribution of medical costs and their potential effect on aggregate cost. As changes in costs are not age neutral, the health system needs to facilitate a dynamic shift of resources from those whose relative cost rise less -- the young -- to those whose relative costs rise more -- the old. As there is an apparent market failure associated with uncertainty about growth in longevity (no market for 'death insurance'), the private market does not seem to effectively facilitate this shift. Aging, and its known correlates and antecedents produce a complex picture about the potential effect of aging on total cost of medical care in Israel. Shifting morbidity and mortality to older age can lower cost of care, all other things equal. Growth in incomes and insurance coverage are likely to increase use of care particularly amongst the old. Rising levels of education would have the opposite effect, but among the relatively young. The effect of a key element, technology, remains unknown. The Israeli experience also points to the advantages of a unified publicly financed health system with a timely allocation mechanism.