Longevity, Education, and Income: How Large is the Triangle?

Hoyt Bleakley

No 24247, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: While health affects economic development and wellbeing through a variety of pathways, one commonly suggested mechanism is a "horizon" channel in which increased longevity induces additional education. A recent literature devotes much attention to how much education responds to increasing longevity, while this study asks instead what impact this specific channel has on wellbeing (welfare). I note that death is like a tax on human-capital investments, which suggests the use of a standard public-economics tool: triangles. I construct estimates of the triangle gain if education adjusts to lower adult mortality. Even for implausibly large responses of education to survival differences, almost all of today's low-human-development countries, if switched instantaneously to Japan's survival curve, would place a value on this channel of less than 15% of income. Calibrating the model with well-identified micro- and cohort-level studies, I find that the horizon triangle for the typical low-income country is instead less than a percent of lifetime income. Gains from increased survival in the 20th-century are similarly sized.

JEL-codes: J24 N3 O1 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-edu, nep-hea and nep-lma
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