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http://ssrn.com/abstract=1312618
 
 

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Estimating Marginal Returns to Medical Care: Evidence from At-Risk Newborns


Douglas Almond Jr.


Columbia University - Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Joseph J. Doyle Jr.


Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA); National Bureau of Economic Research (NBER)

Amanda Ellen Kowalski


National Bureau of Economic Research (NBER); Yale University

Heidi Williams


MIT Department of Economics; National Bureau of Economic Research (NBER)

December 2008

NBER Working Paper No. w14522

Abstract:     
We estimate marginal returns to medical care for at-risk newborns by comparing health outcomes and medical treatment provision on either side of common risk classifications, most notably the "very low birth weight" threshold at 1500 grams. First, using data on the census of US births in available years from 1983-2002, we find evidence that newborns with birth weights just below 1500 grams have lower one-year mortality rates than do newborns with birth weights just above this cutoff, even though mortality risk tends to decrease with birth weight. One-year mortality falls by approximately one percentage point as birth weight crosses 1500 grams from above, which is large relative to mean one-year mortality of 5.5% just above 1500 grams. Second, using hospital discharge records for births in five states in available years from 1991-2006, we find evidence that newborns with birth weights just below 1500 grams have discontinuously higher costs and frequencies of specific medical inputs. We estimate a $4,000 increase in hospital costs as birth weight approaches 1500 grams from above, relative to mean hospital costs of $40,000 just above 1500 grams. Taken together, these estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1500 grams is on the order of $550,000 in 2006 dollars.

Number of Pages in PDF File: 61

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Date posted: December 8, 2008  

Suggested Citation

Almond, Douglas and Doyle, Joseph J. and Kowalski, Amanda Ellen and Williams, Heidi, Estimating Marginal Returns to Medical Care: Evidence from At-Risk Newborns (December 2008). NBER Working Paper No. w14522. Available at SSRN: http://ssrn.com/abstract=1312618

Contact Information

Douglas Vincent Almond Jr. (Contact Author)
Columbia University - Graduate School of Arts and Sciences, Department of Economics ( email )
420 W. 118th Street
International Affairs Building, MC 3308
New York, NY 10027
United States
212-854-3239 (Phone)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Joseph John Doyle Jr.
Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA) ( email )
50 Memorial Drive
E52-410
Cambridge, MA 02142
United States
617-452-3761 (Phone)
617-258-6855 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Amanda Ellen Kowalski
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Yale University ( email )
28 Hillhouse Ave
New Haven, CT 06520-8268
United States
Heidi Williams
MIT Department of Economics ( email )
50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
(617) 324-4326 (Phone)
(617) 253-1330 (Fax)
HOME PAGE: http://econ-www.mit.edu/faculty/heidiw
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  49
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