Curriculum Vitae
Andrew B. Rice |
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Placement Director: Neil Wallace
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Graduate Secretary & Placement Assistant: Lynn Sebulsky (814)865-1458 lms50@psu.edu |
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Curriculum Vitae |
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THESIS ABSTRACT It is well known that there is a strong positive relationship between better health outcomes and higher educational attainment. As a rule of thumb; one extra year of education is associated with an extra one and a half years of life. Two main theories about this association are discussed in the literature: that education improves longevity through some unknown mechanism; or that there is a selection bias due to unobserved heterogeneity. One common example used to support the selection bias theory is that patient people may be willing to invest in more education and better health behaviors when young since these individuals have not heavily discounted the benefits when old. Likewise; impatient people care little about the future and therefore choose not to invest in education and health behavior. The distinction has important policy ramifications: if the selection bias theory explains most of the association, simply encouraging education may not generate a strong health behavior response. Fortunately recent research has taken advantage of natural experiments to suggest that unobserved heterogeneity does not fully explain why health and education are so strongly related. To the extent that both theories explain some part of the association, it is currently unknown which is dominant and how they interact with each other. I use the Health and Retirement Study data from 1992-2006 to structurally estimate a dynamic model of health and education choice allowing for permanent unobserved heterogeneity in preferences. This is the first attempt to tie detailed micro data to an economic model in order to examine the effects of education on health behavior. Results suggest that while there is considerable heterogeneity in the HRS sample; controlling for it does not diminish the direct health returns to education. However the model suggests that there is significant selection into low education and detrimental health behaviors based upon preference heterogeneity. The model predicts an average gain of only one third of a year after an exogenous shift of one year of education which is substantially lower than the typical rule of thumb result of one and a half years that previous studies have reported.
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