1. 1 Public Health and Mortality: What Can We Learn from the Past? Dora L. Costa and Matthew E. Kahn

2. 2 Introduction In the early 20 th century, urban dwellers and especially poor urbanites faced a variety of quality of life challenges Health & Sanitation Large urban mortality penalty Growing up in large urban areas left permanent scar (adult mortality affected)

3. 3 NYC, 1890

4. 4 Working on feathers, NYC, 1911, “Dirty floor, vermin abounded, garbage standing uncovered”

5. 5 Boys picking over garbage, Boston, 1909

6. 6 Chicago river, 1915

7. 7 Intro Continued A time of smaller decentralized government Redistributionary spending was focused on public health rather than welfare Perhaps, easier to build a voting contingent for public health due to contagion spillovers

8. 8 The Urban Mortality Penalty Recently a number of economic historians are taking a quantitative look at the role of government in improving quality of life in cities Haines Cain and Rotella Troesken

9. 9 Our Questions What characteristics of the local populace predict greater redistributionary expenditure? Were there unintended consequences of greater government expenditure?

10. 10 More Questions Was government expenditure effective in reducing death rates? Was such public health expenditure progressive policy that disproportionately benefited the urban poor and minorities? Based on “Value of Life” estimates, what were the benefits of this health expenditure?

11. 11 Data No one data set exists to answer our core set of questions The data appendix concisely describes the multiple individual, city, state health data sets and expenditure data sets, and demographic data sets and political data that we combine to estimate our regression models

12. 12 Outline of the Empirical Work 1. Redistribution --- city and state level regressions (Table One) 2. Health Production Functions– micro, city and state level (Tables Two-Nine) 3. Compensating Differentials (Table Ten)

13. 13 What Characteristics of the Local populace predict greater redistributionary expenditure? “Modern Literature” stressing that redistribution is a normal good Heterogeneity lowers redistributionary spending Results in Table One based on our city and state measures of redistribution

14. 14 Unintended Consequences of Public Expenditure? No evidence that higher spending cities were immigrant magnets Evidence of some crowding out of private charity

15. 15 Does Greater Public Health Expenditure Matter? Our Outcome measure is death Evidence Based on: Individual Level data City Level data State Level data

16. 16 Cities in 1910: Individual Level Evidence OLS and IV results indicate that greater expenditures reduced white child mortality 1907 Expenditure = Flow Alternative measure of public health investment is the “stock” of existing infrastructure such as water filtration and sewer systems

17. 17 Cities in 1910: Individual Level Evidence, Cont Greater fraction of population with sewer connection the lower child mortality for whites Greater fraction of population with filtered water the lower child mortality for whites Among whites water filtration benefited mainly renters

18. 18 Cities in 1910: Individual Level Evidence, Cont Blacks did not benefit from city spending Evidence suggests that if benefits did accrue accrued to black home-owners Urban penalty high for both whites and blacks, but five times greater for blacks

19. 19 Cities in 1940, Individual Level Evidence No longer observe urban mortality penalty Cities had solved their sanitation problems Major child health problems now in areas where medical care and parents’ knowledge very important Health board expenditures did not predict child mortality but percent of kids with health exam did

20. 20 Cities in 1940: Individual Level Evidence, Cont The greater the percent of children who had had a health exam in 1930 the lower child mortality in the 1930s among whites (sign reversal for blacks) Among whites, renters benefited more from city health exams blacks, if there was any benefit, accrued to home owners

21. 21 Cities 1912-1925: City Level Data Table Six Cities spending one standard deviation above the mean had statistically significant lower death and case rate from measles and lower case rate from typhoid

22. 22 Cities in 1910: City Level Data (Table Seven) Once IV city expenditures significantly lower white infant mortality rates Sign on estimates for blacks suggests that blacks benefited as much from city expenditures as whites Why differences with individual level data? Sanitation came to black neighborhoods with 5-7 year lag so may not be capturing this in our “stock” child death measure for 1910 micro data

23. 23 States, 1910-1940: State Level Data State expenditures mainly effective in reducing death rates from typhoid fever, diphtheria, and dysentery Effects on both white and black death rates, but overall slightly bigger effect on white death rates Hernias as a “placebo”

24. 24 Valuing These Health Gains If a city spends a $1 more on public health, how much does the populace value this spending? This expenditure lowers death rates – city level infant mortality regressions tell us by how much Hedonic compensating differentials estimates tell us the “value” of mortality decline

25. 25 Valuation Continued Value of reduced death rates can be interpolated using 1940 to 1980 “Value of Life” estimates from Costa and Kahn Alternatively, estimate hedonic rental regressions using 1917 micro data to estimate how much higher are rents in low mortality rate cities See Table 10

26. 26 Valuation, Cont. Std Dev increase in per capita public expenditure=city wide expenditure increase of $3.5 million (2002 dollars) –Saves 145 infants in the average city Saving 145 infants worth $7.5 to 38.2 million (2002 dollars)

27. 27 Were Cities Underinvesting in Public Health? Incidence of who gained – the poor We have nothing to say on the costs of raising funds to pay more for public health City may have been unaware

28. 28 Conclusion Politics matters in public health expenditures –Middle class fear of contagion from poor give them a personal stake in supporting such expenditure relative to welfare By any measure early 20 th century mortality transformation very high value (and therefore value of govt services) –We are not measuring this in our growth estimates

29. 29 NYC, 1935