Young Adult Obesity and Household Income: Effects of Unconditional Cash Transfers.

The global obesity epidemic is anticipated to become one of the most significant noncommunicable disease threats to global public health in the near future (Lancet 2011). Leading public health experts around the world have called for coordinated government action to help turn the tide of obesity and the twin threats of cardiovascular disease and diabetes (Wang et al. 2011; Lancet 2011). There is significant concern that the rise in obesity worldwide will slow or even reverse the significant mortality reductions experienced by high-income countries in the past several decades (Swinburn et al. 2011) and that obesity has become a bigger threat to public health than smoking. Current trends are particularly alarming among children and adolescents. Globally in 2004, there were 170 million overweight (inclusive of obese) children (Lobstein, Baur, and Uauy 2004). The United States has experienced a drastic increase in the prevalence of childhood and adolescent obesity since the 1980s. According to the most recent National Health and Nutrition Examination Survey (United States Department of Health and Human Services 2008), 11.9 percent of children aged 2–19 were at or above the ninety-seventh percentile of the Body Mass Index (BMI)- for-age growth charts, and 17 percent were at or above the ninety-fifth percentile (Ogden et al. 2010). Being overweight in young adulthood is a predictor of later-life obesity and chronic conditions such as diabetes and heart disease. The recent rise in poverty in the Unitec States is particularly alarming given the connection between household socioeconomic status and children’s BMI and later-life health. There is a strong correlation between poverty and obesity and other health ailments. We know relatively little about the mechanisms behind these relationships. A good understanding of the link between poverty and obesity is particularly pressing today, when the poverty rate in the United States stands at its highest since 1993.1 Theory predicts an inverted U-shape relationship between unearned income and weight (Lakdawalla and Philipson 2009). As income increases, households and individuals increase their consumption of food, and consequently we see an increase in weight. Beyond a certain threshold, the wealthiest households are either able to purchase higher quality foods that are more nutritious or pursue health-related activities, so the income-BMI curve starts sloping downward. Without exogenous variation in either children’s body mass or household income, the direction of causality between the two is unclear. To our knowledge, there is no experimental evidence testing this prediction. This study uses exogenous cash transfers to identify the effects of positive household income shocks on adolescent BMI. Our research shows that exogenous unearned household income transfers have heterogeneous effects on adolescent and young adult health depending on pre- intervention family socioeconomic background. Consistent with theory, we find evidence that extra unearned household income increases BMI among youths from poorer households relative to their wealthier peers. We study the effect of exogenous household income transfers for American Indian households in North Carolina. These transfers are provided to all enrolled adult Eastern Cherokee tribal members regardless of their economic characteristics. 2 Included in our data are non-Indian children who reside in the same 11 counties who are untreated by the transfer program. An equal proportion of profits from the tribal casino operations is provided to the entire distribution of tribal member household types. Both wealthy and poor individuals received the same-sized transfers. Our findings suggest that the income transfers generated by the casino operations increased BMI among adolescents from families with average incomes below $30,000, but not among their better off peers. Further investigation reveals that this is primarily due to differential changes in weight among youths from different economic backgrounds. Children from the initially poorer households tend to increase their relative BMI over time. In addition to initial household income, we examine several other channels that may contribute to heterogeneous effects of extra household income on adolescent health. For example, we study the effects of pre-intervention maternal labor force participation, mother’s education, subject’s own education, and the child’s birth weight, which is a proxy for the child’s health endowment. We find that the differences in outcomes induced by differences in initial household income are robust to the inclusion of these additional potential mechanisms. This research contributes to two major strands of the existing empirical literature. First, we offer the first assessment of the medium-term effects of quasi-experimental household income transfers on adolescent BMI. We add to the literature examining the health effects of public policy interventions in childhood. We show that interventions that start as late as adolescence could benefit children’s long-term well-being. Further, it is demonstrated that the effects of these income interventions vary with initial family socioeconomic status. Second, we contribute to the growing economics literature on the impact of Native American-run casinos on the well-being of neighboring communities (Evans and Topoleski 2002; Wolfe et al. 2012). Native Americans are a population that has received relatively little attention in the economics literature, especially considering the dire socioeconomic and health conditions on many Native American reservations. The Indian Gaming Regulatory Act (IGRA) of 1988 provided an avenue for Native American tribes to pursue potentially lucrative gaming ventures on their reservations in order to combat poor economic conditions. The express purpose of IGRA was to increase tribal incomes and to lift tribal members out of poverty and alleviate social problems related to poverty and deprivation, including poor health outcomes. We show that the effects of casino-generated cash transfers on children from tribal communities are not unambiguous. To our knowledge this is the first study of the effects of casino transfers on tribal members’ health that uses individual panel data.