The Long-Run Impacts of Biomedical Innovation: Evidence from the Sulfa Drug Era

1. The Long-Run Impacts of Biomedical Innovation: Evidence from the Sulfa Drug Era Work in progress, December 2010 Sonia Bhalotra, University of Bristol (Bristol, UK) Atheendar Venkataramani, Washington University School of Medicine (St. Louis,USA)

2. Introduction • Growing literature on the impact of the in utero and early childhood environment on health and economic outcomes later in life (Almond and Currie, 2010; Heckman 2007). Focus on natural disasters and epidemics- • Famine e.g. Dutch, Chinese • Pollution e.g. Chernobyl • Disease e.g. influenza epidemic

3. A few recent studies analyse the long-run effects of public programs • malaria & hookworm eradication; water quality improvements – Lucas, 2010; Cutler, et al, 2010; Bleakley, 2010; Venkataramani, 2010 In quantifying the longer run benefits of intervention, these studies have clearer policy implications.

4. What We Do • Examine the long-run impacts of early life exposure to infectious disease using the sulfa drug innovation as an instrument for infectious disease. • Sulfa drugs (anti-microbial sulfonomides) were the first pharmaceuticals effective at treating infectious diseases. Contribute evidence on • Impact of birth-year exposure to infection on health, cognitive and economic outcomes in adulthood • Differences by sex *race • Reinforcing (v compensating) parental investments • The [undocumented] long run returns to medical innovation

5. Sulfa Drugs- timing • Discovered in a German lab in 1932, evidence for their anti-microbial potential first published in 1935, first clinical trials in 1936, 1937 (London, NY) • Jayachandran, Lleras-Muney and Smith (JLS 2010) identify a structural break in trend in 1937 for diseases treatable by sulfa drugs: strep infections, pneumonia, meningitis • The US witnessed unprecedented declines in mortality in the 20th century. There were no significant advances in treatment of infectious disease before sulfa arrived. And nothing else on the stage till antibiotics appeared in the mid-1940s. • We sample cohorts born 1930-1943.

6. Short run impact • JLS attribute a 25 % decline in maternal mortality [puerperal fever] and a 13 % decline in pneumonia and influenza mortality* between 1937 and 1943 to sulfa. • These declines a/c for 40-75% of the total decline in deaths from these causes during the period. • No significant change in 1937 in rate of decline of mortality from “control diseases” such as TB, diarrhea, cancer, heart disease. • * pneumonia responded to sulfa but influenza did not. Some 75% of deaths from (p+i) were on account of p.

7. Prevalence and infections of children Pre v post sulfa mortality rates per 1000 (JLS) • Maternal mortality 6.5 – 3.6 • Influenza-pneumonia 1.2 – 0.8 Pre v post neonatal mortality rates per 1000- • All causes: 3.6 - 2.4 • Pneumonia: 1.6 – 1.1 • Influenza: 0.2 – 0.2 Pneumonia was the leading cause of child death (8% v 44% pre) Mortality rates proxy wider morbidity rates. We analyse LR impact of exogenous declines in pneumonia and maternal mortality rates at birth [and all-cause infant mortality rate.]

8. Why Long-Run Effects? Mechanisms: Pneumonia-exposure Infectious disease results in the body redirecting nutritional resources from physical and mental growth to fighting infection. Long run outcomes most sensitive to exposure in early childhood: (a) rapid growth- greater nutritional demands (b) immune system not fully developed Under-researched potential role of reinforcing or compensating parental investments dynamic complementarities resulting in multiplicative deficits if early life brain development is impaired together with physiological growth.

9. Mechanisms- maternal mortality Maternal mortality rates fell with sulfa because of control of puerperal sepsis, a post-birth infection. Likely paths for impact on offspring are • increase in investments in girls as their life expectancy improves (Jayachandran and Lleras-Muney, 2009; Albanesi and Olivetti, 2010) • Increased investment in both genders as more mothers survive

10. Why gender and race heterogeneity • The pre-sulfa incidence of pneumonia and MMR was about twice as high in the black population- so they stood to gain more. • But there was racial segregation in medical care and black Americans were more rural. For both reasons they were less likely to benefit from new technology. • Boys are more sensitive to resource deprivation in the pre and postnatal period (Waldron 1983, Stinson 1985). So they may show greater gains in general – biological reasons. • Girls may show greater gains from improvements in maternal mortality – parental investment reasons.

11. Extant Empirical Approaches • JLS 2010: Structural break in national trend in treated-disease mortality at time of intervention- • Mdt = α + β treatedd*postt*yeart + .. • Bleakley 2007: Intervention creates a decline in mortality that varies across regions, decreasing (continuously) in the pre-intervention level of mortality- • Mjt= α + βpostt*Mj(pre) + ..

12. Our Empirical Strategy • We effectively combine these approaches, exploiting variation across treated/untreated diseases in states with high/low pre-intervention mortality pre/post sulfa. • Individual data from the US census files for 1970-2000. Cohorts born in 1937 are aged 33, 43, 53, 63. • Data collapsed to state*sex*race averages. • Later: longitudinal micro data on offspring of exposed cohorts.

13. Estimated Equations • First stage Mdst =αf +βfpostt*Mds(pre)+ δsf + γtf +µrf + εstf [treatment] • Second stage Yrst = αs + βsMdst + Xsts´π +δrss + γrts +µras + εsts Marginal impact on outcome of sulfa-induced decline in mortality. Xst includes control disease mortality rates.

14. Reduced form Yrst = α+ β*postt*Ms(pre)+ Xsts´π+ θrs + ηrt + λra+ ergst ;βs = β / βf Postt = 1 for birth cohorts 1937-43 Ms(pre) is the state-specific pre-intervention mortality rate (1930-35). Outcome equations include fixed effects forrace*birth state, race*birth year and race*census year. Heterogeneity in treatment effects by gender*race.

15. Threats to Identification State * cohort macroeconomic or disease shocks Pre-existing trends We assess stability of our results to inclusion of birth state * birth year data on mortality rates from other infectious and non-infectious diseases, state macroeconomic characteristics and state specific time trends. TB and diarrhoea measure state-year variation in sanitation and poverty. Heart disease and cancer deaths capture trends in medical technology.

16. Mortality rates for sulfa-treated diseases- trend break (JLS 2010)

17. Trend Breaks: treated v control diseases

18. Convergence in pneumonia-influenza mortality rate post-sulfa

19. Convergence in pneumonia-influenza mortality compared to tuberculosis

20. Convergence Regressions

21. Data • Outcomes • log family income, educational attainment, college attendance, current employment, number of children born, disability preventing work, difficulty with mobility, self-care, cohort size • We compute (weighted) means for race X gender X birth state X birth year X census year cells • State-year varying controls • Diarrhea, TB, heart disease and cancer mortality rates from US Vital Statistics • State income per capita, number of hospitals, physicians, schools and educational spending from various sources

22. Educational Outcomes

23. Income, Employment, Fertility

24. Disability

25. Disability

26. IV Estimates

27. Simulation- women

28. Simulation- men

29. Comparison of effect sizes A state with the mean pre-sulfa pneumonia mortality rate saw a post-sulfa education increase of 0.25 years and an income increase of 4%. • Influenza and pneumonia death rate pre/post 1937: 1.1 – 0.79 Almond (2006) estimates that the cohort exposed to the influenza epidemic of 1918 had 0.25 years less education and income lower by 6% percent • Influenza &pneumonia death rate 1917-1918 in %: 1.16- 4.91 • Influenza death rate 1917-1918 in %: 0.17 – 2.9 Suggests pneumonia more scarring than influenza.

30. ITT<ATT • We are estimating the intent to treat (ITT) i.e. the effect of sulfa averaged across the population it is supposed to help • This will be smaller than the ATT to the extent that not everybody could afford or access sulfa drugs. e.g r/u, m/f. • The cost of a complete course was $28-$100 (in 2008 US $) or $4.3 per patient per day.

31. Pooled sample: coefs on cohort*base

32. white females

33. white males

34. black females

35. black males

36. Other Results • Stratifying by race • Coefficients in preferred specification (with all controls and state trends) generally smaller in magnitude for blacks vis-à-vis whites among males; no consistent pattern with females • Consistent with whites having preferred access to medical treatment (JLS). • Falsification check – placebo interventions in 1935 and 1939 • Precisely estimates zeros for most outcome variables

37. Mechanisms? • Endowments alone? Or endowments + compensating or reinforcing endowments? Effects only in adulthood or differences seen in adolescence? • We examine impact of program on whether child attended school in the two months prior to the enumeration date of the 1950 census (“marginal” cohort is13 years old) • Schooling is an outcome in itself; but mechanism for earnings, empl, fertility. • Caveat 1: compulsory school laws generally in place by early 1930s, so lack of attendance could be due to variety of factors and may be thought of as an outcome in addition to a mechanism • Caveat 2: School attendance only available for a subset of the sample so sibling FE not possible

38. Schooling of children 7-18 years old

39. Conclusions • There is some evidence of sulfa-induced declines in mortality in early childhood exerting positive long-run effects on income, educational attainment, employment and work disability • The effects are fairly substantial though in cases they are sensitive to controls for to state-year varying variables • The evidence is more robust evidence for men, especially white men. • Black men record stronger effects on prob(poverty).

40. Conclusions contd • Impact from pneumonia reduction > impact from MMR reduction for SES • MMR has more of an impact on disability; more of an impact on black people for eg. their education. • Results for adolescent school attendance suggest reinforcing parental investments • Implications for developing countries, where childhood pneumonia remains a leading cause of death

41. Work in progress • Intergenerational effects • Currently looking at data from Collaborative Perinatal Project: longitudinal data for the early 1970s that include information on offspring of pre/post sulfa cohorts. Rich set of indicators. • Preliminary findings show association between conditions faced by mothers during birth year on the birth weight, motor development and IQ of their children • Mechanisms • These data allow us to look more carefully at parental investments

42. The (provisional) end Please email us with any questions or comments