Induced Innovation and Social Inequality: Evidence from Infant Medical Care

49 Pages Posted: 8 Sep 2009 Last revised: 20 Sep 2014

See all articles by David M. Cutler

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Ellen Meara

Harvard Medical School; National Bureau of Economic Research (NBER)

Seth Richards-Shubik

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2009

Abstract

We develop a model of induced innovation where research effort is a function of the death rate, and thus the potential to reduce deaths in the population. We also consider potential social consequences that arise from this form of induced innovation based on differences in disease prevalence across population subgroups (i.e. race). Our model yields three empirical predictions. First, initial death rates and subsequent research effort should be positively correlated. Second, research effort should be associated with more rapid mortality declines. Third, as a byproduct of targeting the most common conditions in the population as a whole, induced innovation leads to growth in mortality disparities between minority and majority groups. Using information on infant deaths in the U.S. between 1983 and 1998, we find support for all three empirical predictions. We estimate that induced innovation predicts about 20 percent of declines in infant mortality over this period. At the same time, innovation that occurred in response to the most common causes of death favored the majority racial group in the U.S., whites. We estimate that induced innovation contributed about one third of the rise in the black-white infant mortality ratio during our period of study.

Suggested Citation

Cutler, David M. and Meara, Ellen and Richards-Shubik, Seth, Induced Innovation and Social Inequality: Evidence from Infant Medical Care (September 2009). NBER Working Paper No. w15316. Available at SSRN: https://ssrn.com/abstract=1469111

David M. Cutler (Contact Author)

Harvard University - Department of Economics ( email )

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Ellen Meara

Harvard Medical School ( email )

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National Bureau of Economic Research (NBER)

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Seth Richards-Shubik

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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