You Are What Your Parents Think: Height and Local Reference Points

50 Pages Posted: 26 Apr 2018 Last revised: 22 Apr 2020

See all articles by Fan Wang

Fan Wang

University of Houston - Department of Economics

Esteban Puentes

University of Chile - Diagonal Paraguay

Jere Behrman

University of Pennsylvania - Department of Economics

Flavio Cunha

University of Pennsylvania - Department of Economics

Date Written: April 8, 2020

Abstract

Recent estimates are that about 150 million children under five years of age are stunted, with significant long-run negative consequences on their schooling, cognitive skills, health and economic productivity. Understanding what determines such growth retardation, therefore, is very important. We build a structural model for nutritional choices and health with reference-dependent preferences. Parents care about the relative health of their child compared to some reference population. In our empirical model, we use height as the health outcome parents target, and reference height is an equilibrium object determined by parental nutritional choices for earlier cohorts in the same village. Taking advantage of a protein-supplementation experiment in Guatemala, we use exogenous variations in differential height growth paths between treated and control villages to estimate the model. We conduct a number of counterfactual policy simulations. First, we find that reference-point changes account for up to 60\% of the 1.7cm in height difference between experimental and control villages at 24 months of age. Second, focusing on one-period effects, to obtain the same mean effects as an 1 cm increase in reference points would require a protein-price discount of 37 percent or an income increase of 60 percent. Third, endogenous reference-point changes lead to significant policy spillovers: under poor-targeted subsidy policies, richest households over time gain up to 50 percent of the height gains of poorest households; under an universal subsidy policy, poorest households' height gains increase from an initially small change by up to 4.8 times across periods as richest households, who also receive subsidies, help push-up height reference points.

Keywords: Early Childhood, Height, Reference Point

JEL Classification: I15, D8, D9, O15

Suggested Citation

Wang, Fan and Puentes, Esteban and Behrman, Jere R. and Cunha, Flavio, You Are What Your Parents Think: Height and Local Reference Points (April 8, 2020). PIER Working Paper No. 18-007, Available at SSRN: https://ssrn.com/abstract=3167023 or http://dx.doi.org/10.2139/ssrn.3167023

Fan Wang (Contact Author)

University of Houston - Department of Economics ( email )

Houston, TX 77204-5882
United States

HOME PAGE: http://fanwangecon.github.io

Esteban Puentes

University of Chile - Diagonal Paraguay

257 OF 1206
Santiago
Chile

Jere R. Behrman

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7704 (Phone)
215-573-2057 (Fax)

Flavio Cunha

University of Pennsylvania - Department of Economics ( email )

3718 Locust Walk
Room 527
Philadelphia, PA 19104
United States
215-898-5652 (Phone)

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