Life expectancy at birth is not a predictor of health care efficiency…

This is going to be a short post to argue that pundits (and some economists) need to stop quoting life expectancy figures to argue for/against a particular health care system. This belief is best exemplified in a recent paper in the Journal of the American Medical Association where Papanicolas et al. (2018)  point out that the United States “spent nearly twice as much as 10 high-income countries (…) and performed less well on many population health outcomes”. While the authors make good points about administrative costs, they point out that the US has a low level of life expectancy.

Sure, that is actually true – but Americans tend to die in greater proportions from homicides, drug overdoses and car accidents (Americans drive more than Europeans) than in other rich countries. While these factors of mortality are tragic (except car accidents since Americans seem to prefer the benefits of mobility to the safety of not driving), they are in no way related to the efficiency of health care provision. How much of a deal are these in explaining differences with other industrialized countries? A pretty big deal.  For example, these three factors alone account for 64% of the male life expectancy gap between Austria and the United States (see table reproduced below). For women, 26% of the gap between Austria and the United States is explained by these three factors.

The study I cite here only includes three factors. If you add in other factors like drownings among youths (Americans tend to have more drownings than several industrialized countries) which is a result of the fact that Americans are richer and can afford pools (while Europeans tend not to), then you keep explaining away the difference.  This is not to say that American health care is great. However, this says that American health care is not as bad as life expectancy outcomes suggest.

Mortality

 

On demography and living standards in the colonial era

This is a topic that has been bugging me. Very often, historians will (accurately) point out mortality statistics in the United States, Canada (Quebec) and the Latin America during the colonial era were better than in the comparable Old World (comparing French with French, British with British, Spanish with Spanish). However, they will argue that this is evidence that living standards were higher. This is where I wish to make an important nuance.

Settlement colonies (so, here there is a bigger focus on North America, but it applies to smaller extent to Latin America which I am more tempt to label as extractive – see here) are generally frontier economies. This means that they are small economies because of small populations.  This means that labor and capital are scarce relative to land. All outputs that come from the relatively abundant factor will thus tend to be cheaper if there is little international trade for the goods that they are best at producing. The colonial period pretty much fits that bill. The American and Canadian colonies were basically agricultural colonies, but very few of those agricultural outputs actually crossed the Atlantic. As such, agricultural produces were cheap. This is akin to saying that nutrition was cheap.

This, by definition, will give settlement colonies an advantage in terms of biological living standards. As they are not international price takers, wheat is cheaper than in the old world. This is why James Lemon spoke of the New World as the “Best poor man’s country” (I love that expression) : it was easy to earn subsistence. However, beyond that it is very hard to go beyond. For example, in my dissertation (articles still in consideration at Cliometrica and Canadian Journal of Economics) I found that when wages were deflated by a subsistence basket containing very few services and manufactured goods and which relied heavily on untransformed foods, Canada was richer than the richest city of France. Once you shifted to a basket that marginally increased transformed goods and manufactured goods, the advantage was wiped away.

Yet, everything indicates that mortality rates were greater in Paris and France and than in Quebec City and Quebec as a whole (but not by a lot) (see images below).  Similar gaps seem to exist for the United States relative to Britain, but the data is not as rich as for Quebec. However, the data that exists for New England suggests that death rates were lower than in England but the “bare bones” real incomes measured by Lindert and Williamson show that New England may have been poorer than Great Britain (not by much though).

Crude Death Rates

IMR

I am not saying that demographic and biological data is worthless. Quite the contrary (even I wanted to, I could not since I have a paper on the heights of French-Canadians from 1780 to 1830)! The point is that data matters in context.  The world is full of small non-linearities between variables. While “good” demographic outcomes are generally tracking “good” economic outcomes, there are contexts where this may be a weaker relation (curvilinear relations between variables). I think that this is a good example of that point.

Where is the optimal marriage market?

I have spent the past few weeks playing around with where the optimal marriage market is and thought NoL might want to offer their two cents.

At first my instinct was that a large city like New York or Tokyo would be best. If you have a larger market, your chances of finding a best mate should also increase. This is assuming that transaction costs are minimal though. I have no doubt that larger cities present the possibility of a better match being present in the dating pool.

However it also means that the cost of sorting through the bad ones is harder. There is also the possibility that you have already met your best match, but turned them down in the false belief that someone better was out there. It’s hard to buy a car that we will use for a few years due to the lemon problem. Finding a spouse to spend decades with is infinitely harder.

In comparison a small town information about potential matches is relatively easy to find. If you’re from a small town and have known most people since their school days, you have better information about the type of person they are. What makes someone a fun date is not always the same thing that makes them a golf spouse. You may be constrained in who you have in your market, but you can avoid lemons more easily.

Is the optimal market then a mid sized city like Denver or Kansas City? Large enough to give you a large pool of potential matches, but small enough that you can sort through with minimal costs?

P.S. A friend has pointed out that cities/towns with large student populations or military bases are double edged swords for those looking to marry. On the one hand they supply large numbers of dating age youths. On the other hand, you would not want to marry a 19 year old who is still figuring out what they want to major in.

Wedding date and superstitions

There is a neat new paper in the most recent edition of the Journal of Population Research by Gabriele Ruiu and Marco Breschi on wedding dates and superstitutions in Italy. Here is the abstract:

In Italy, it is believed that Tuesdays and Fridays are particularly unlucky days for weddings as well as the 17th day of each month. Previous studies realized in the aftermath of the Second World War have shown the strong influence that these superstitions had in determining the wedding dates in the entire country. We have used exhaustive data collection of all marriages celebrated in Italy in the years 2007–2009 to investigate whether superstitions are still able to influence the choices of spouses. We find that this influence is still present after the great economic, social and demographic transformation of Italian society. We also show that a wife’s education reduces the influence of superstition on the choice of the date of marriage while those who opt for a religious rite are also those who are more careful in avoiding inauspicious days.

On 7 million deaths from air pollution

ATTN published a video of An-huld (the really cool guy who made my childhood by being in all my favorite action movies like Predator* and who ended up being the governor of California). In that short clip, Schwarznegger starts by saying that 7 million individuals die from pollution-related illnesses.

That number is correct. But it is misleading.

People see pollution as “all and the same”. But some forms of pollution increase with development (sulfur emissions and some would argue that too much CO2 emissions is pollution as it causes climate change). However, others drop dramatically – especially heavy particules (Pm10) which are a great cause of smog. Julian Simon (the late cornucopian economist who is one my greatest intellectual influence) pointed out this issue and noted that the deadliest forms of pollution are those that relate to underdevelopment.

Back in 2003, Jack Hollander published the Real Environmental Crisis: Why Poverty, Not Affluence is the Environment’s Number One Enemy. Hollander pointed out that simply from the combustion of organic matter (read: firewood and animal manure – literally burning fecal matter) indoors for the purposes of heating, cooking and lighting was responsible for close to 2 millions deaths.

Since then, the WHO came out with a study pointing out that around 3 billion people cook and heat their homes with open fires and stoves that rely on biomass or anthracite-coal. They put the number of premature deaths directly resulting from this at over 4 million people. This is close to 60% of the figure cited by the former President of California (yes, I know he was governor – see here). In other words, 60% of the people who die prematurely as a result of strokes, ischaemic heart diseases, chronic obstructive pulmonary diseases and lung cancers can be attributed to indoor air pollution. That means pollution resulting from the fact that you are so poor that you have to burn anything at hand at the cost of your health.

True, richer countries pollute and there are policy solutions (I have often argued that governments are better at polluting than at reducing pollution, but that is another debate) that should be adopted. But, these forms of pollution do not harm human life as much as those that come with poverty.

* By the way, when you watch Predator, do you realize that there are two future American governors in that movie? I mean, imagine that when Predator came out, some dude from the future told you that two of the main actors would end governing American states. Pretty freaky!

How Well Has Cuba Managed To Improve Health Outcomes? (part 3)

As part of my series of blog post reconsidering health outcomes in Cuba, I argued that other countries were able to generate substantial improvements in life expectancy even if Cuba is at the top. Then I pointed out that non-health related measures made Cubans so poor as to create a paradoxical outcome of depressing mortality (Cubans don’t have cars, they don’t get in car accidents, life expectancy is higher which is not an indicator of health care performance). Today, I move to the hardest topic to obtain information on: refugees.

I have spent the last few weeks trying to understand how the Cuban refugees are counted in the life tables. After scouring the website of the World Health Organization and the archives of Statistics Canada during my winter break, I could not find the answer.  And it matters. A lot.

To be clear, a life table shows the probability that an individual of age will die by age X+1 (known as Qx). With a life table, you will obtain age-specific death rates(known as Mx), life expectancy at different points and life expectancy at birth (Lx)(Where x is age). Basically, this is the most important tool a demographer can possess. Without something like that, its hard to say anything meaningful in terms of demographic comparison (although not impossible).The most common method of building such a table is known as a “static” method where we either compare the population structure by age at a single point in time or where we evaluate the age of deaths (which we can compare with the number of persons of each group alive – Ax). The problem with such methods is that static life tables need to be frequently updated because we are assuming stable age structure.

When there is important migration, Qx becomes is not “mortality” but merely the chance of exiting the population either by death of migration. When there are important waves of migration (in or out), one must account for age of the entering/departing population to arrive at a proper estimates of “exits” from the population at each age point that separate exits by deaths or exits (entries) by migration.

As a result, migration – especially if large – creates two problems in life tables. It changes the age structure of the population and so, the table must be frequently updated in order to get Ax right. It also changes the structure of mortality (exits). (However, this is only a problem if the age structure of migrants is different from the age structure of the overall population).

Since 2005, the annual number of migrants from Cuba to the United States has fluctuated between 10,000 and 60,000. This means that, on an annual basis, 0.1% to 0.5% of Cuba’s population is leaving the country. This is not a negligible flow (in the past, the flow was much larger – sometimes reaching north of 1% of the population). Thus, the issue would matter to the estimation of life tables. The problem is we do not know how Cuba has accounted for migration on both mortality and the reference populations! More importantly, we do not know how those who die during migration are measured.

Eventually, Ax will be adjusted through census-based updates (so there will only be a drift between censuses). However, if the Cuban government counts all the migrants as alive as they arrive in a foreign country as if none died along the way, it is underestimating the number of deaths. Basically, when the deaths of refugees and emigrants are not adequately factored into survival schedules, mortality schedules are be biased downward (especially between censuses as a result of poor denominator) and life expectancy would be accordingly biased upward.

Now, I am willing to reconsider my opinion on this particular point if someone indicates some study that has escaped my gaze (my Spanish is very, to put it euphemistically, poor). However, when I am able to find such information for other Latin American countries like Chile or Costa Rica and not for Cuba, I am skeptical of the value of the health statistics that people cite.

The other parts of How Well Has Cuba Managed To Improve Health Outcomes?

  1. Life Expectancy Changes, 1960 to 2014
  2. Car ownership trends playing in favor of Cuba, but not a praiseworthy outcome

Ten best papers/books in economic history of the last decades (part 1)

In my post on French economic history last week,  I claimed that Robert Allen’s 2001 paper in Explorations in Economic History was one of the ten most important papers of the last twenty-five years. In reaction, economic historian Benjamin Guilbert asked me “what are the other nine”?

As I started thinking about the best articles, I realized that such a list is highly subjective to my field of research (historical demography, industrial revolution, great divergence debate, colonial institutions, pre-industrial Canada, living standards measurement) or some of my personal interests (slavery and the great depression). So, I will propose a list of ten papers/works that need to be read (in my opinion) by anyone interested in economic history. I will divide this post in two parts, one will be published today, the other will come out tomorrow.

  • Higgs, Robert. “Wartime Prosperity? A Reassessment of the US Economy in the 1940s.” Journal of Economic History 52, no. 01 (1992): 41-60.

Higgs’s article (since republished and expanded in a book and in follow-ups like this Independent Review article) is not only an important reconsideration of the issue of World War II as a causal factor in ending the Great Depression, it is also an efficient primer into national accounting. In essence, Higgs argues that the war never boosted the economy. Like Vedder and Gallaway, he argues that deflators are unreliable as a result of price controls. However, he extends that argument to the issue of measuring GDP. In wartime, ressources are directed, not allocated by exchange. Since GDP is a measure of value added in exchanges, the wartime direction of resources does not tell us anything about real production. It tells us only something about the government values. As a result, Higgs follows the propositions of Simon Kuznets to measure the “peacetime concept” of GDP and finds that the prosperity is overblown. There have been a few scholars who expanded on Higgs (notably here), but the issues underlined by Higgs could very well apply to many other topics.  Every year, I read this paper at least once. Each time, I discover a pearl that allows me to expand my research on other topics.

  • Allen, Robert C. The British industrial revolution in global perspective. Cambridge: Cambridge University Press, 2009.

I know I said that Allen’s article in Explorations was one of the best, but Allen produces a lot of fascinating stuff. All of it is generally a different component of a “macro” history. That’s why I recommend going to the book (and then go to the article depending on what you need). The three things that influenced me considerably in my own work were a) the use of welfare ratios, b) the measurement of agricultural productivity and c) the HWE argument. I have spent some time on items A and C (here and here). However, B) is an important topic. Allen measured agricultural productivity in England using population levels, prices and wages to proxy consumption in a demand model and extract output from there (see his 2000 EREH paper here). As a result, Allen managed to compare agricultural productivity over time and space. This was a great innovation and it is a tool that I am looking to important for other countries – notably Canada and the US. His model gives us the long-term evolution of productivity with some frequency. In combination with a conjonctural estimate of growth and incomes or an output-based model, this would allow the reconstruction (if the series match) of a more-or-less high frequency dataset of GDP (from the perspective of an economic historian, annual GDP going back into the 17th century is high-frequency). Anyone interested in doing the “dirty work” of collecting data, this is the way to go.

  • Broadberry, Stephen, Bruce MS Campbell, Alexander Klein, Mark Overton, and Bas Van Leeuwen. British economic growth, 1270–1870. Cambridge University Press, 2015.

On this one, I am pretty biased. This is because Broadberry (one of the authors) was my dissertation supervisor (and a pretty great one to boot). Nonetheless, Broadberry et al. work greatly influenced my Cornucopian outlook on the world. Early in my intellectual development, I was introduced to Julian Simon’s work (see the best of his work here and here and Ester Boserup whose argument is similar but more complex) on environmental trends. While Simon has generally been depicted as arguing against declining environmental indicators, his viewpoint was much broader. In essence, his argument was the counter-argument to the Malthusian worldview. Basically, Malthusian pressures caused by large populations which push us further down the curve of marginally declining returns have their countereffects. Indeed, more people means more ideas and ideas are non-rival inputs (i.e. teaching you to fish won’t make me unlearn how to fish). In essence, rising populations are no problems (under given conditions) since they can generate a Schumpeterian countereffect (more ideas) and a Smithian countereffect (size of market offsets). In their work, Broadberry et al. basically confirm a view cemented over the last few decades that England had escaped the Malthusian trap before the Industrial Revolution (see Crafts and Mills here and Nicolinni here). They did that by recreating the GDP of Britain from 1270 to 1870. They found that GDP per capita increased while population increased steadily which is a strong piece of evidence. In their book, Broadberry et al. actually discuss this implication and they formulate the Smithian countereffect as a strong force that did offset the Malthusian pressures. Broadberry and al. should stand in everyone’s library as the best guidebook in recreating long-term historical series in order to answer the “big questions” (they also contribute to the Industrious Revolution argument among many other things).

  • Chilosi, David, Tommy E. Murphy, Roman Studer, and A. Coşkun Tunçer. “Europe’s many integrations: Geography and grain markets, 1620–1913.” Explorations in Economic History 50, no. 1 (2013): 46-68.

Although it isn’t tremendously cited yet, this is one of the best article I have read (and which is also recounted in Roman Studer’s Great Divergence Reconsidered). This is because the paper is one of the first to care about market integration on a “local” scale. Most studies of market integration consider long-distance trade for grains and they generally start with the late 19th century which is known as the first wave of globalisation. However, from an economic historian perspective, this is basically studying things once the ball had already started rolling.  Market integration is particularly interesting because it is related to demographic outcomes. Isolated markets are vulnerable to supply shocks. However, with trade it is possible to minimize shocks by “pooling” resources. If village A has a crop failure, prices will rise inciting village B where there was an abundant crop to sell wheat to village A. In the end, prices in village A will drop (causing fewer deaths from starvation) and increase in village B. This means that prices move in a smoother fashion because there are no localized shocks (see the work of my friend Pierre Desrochers who argues that small local markets were associated for most of history with high mortality risks). In their work, Chilosi et al. decide to consider the integration of markets between villages A and B rather than between country A and B. Basically, what they wonder is when geographically close areas became more integrated (i.e. when did Paris and Bordeaux become part of the same national market?). They found that most of Europe tended to be a series of small regions that were more or less disconnected from one another. However, over time, these regions started to expand and integrate so that prices started moving more harmoniously. This is an important development that took place well before the late 19th century. In a way, the ball of market integration started rolling in the 17th century. Put differently, before globalization, there was regionalization. The next step to expand on that paper would be to find demographic data for one of the areas documented by Chilosi et al. and see if increased integration caused declines in mortality as markets started operating more harmoniously.

  • Olmstead, Alan L., and Paul W. Rhode. Creating Abundance. Cambridge Books (2008).

This book has influenced me tremendously. Olmstead and Rhode contribute to many literatures simultaneously. First of all, they show that most of the increased in cotton productivity in the United States during the antebellum era came from crop improvements. Secondly, they show that these improvements occured with very lax patents systems. Thirdly, they show how crucial biological innovations were in determining agricultural productivity in the United States (see their paper on wheat here and their paper on induced innovation). On top of being simply a fascinating way of doing agricultural history (by the way, most economic history before 1900 will generally tend to be closely related to agricultural history), it forces many other scholars to reflect on their own work. For example, the rising cotton productivity explains the rising output of slavery in the antebellum south. Thus, there is no need to rely on some on the fanciful claims that slaveowners became more efficient at whipping cotton out of slaves (*cough* Ed Baptist *cough*). They also show that Boldrine and Levine are broadly correct in stating that most types of technological innovations do not require extreme patents like those we know today (and which are designed to restrict competition rather than promote competition). In fact, their work on biological innovations have pretty much started a small revolution in that regard (see one interesting example here in French). Finally, they also invalidated (convincingly in my opinion) the induced innovation model that generally argued that technologies are developped merely to ease scarcities of factors. While theoretically plausible, this simplified model did not fit many features of American economic history. Their story of biological innovations is an efficient remplacement.