What are the policy implications of the Chetty et al JAMA paper?

Both old media (NYT and WAPO) and new media are burning up over the new Chetty joint out in JAMA.

The paper shows a significant correlation between income and life expectancy that varies geographically across the US.

Many have been quick to use the results to advocate policies to reduce income inequality, mostly by lowering the incomes of the wealthy.

However, there is a big problem with such interpretations of the results, namely that the paper makes no attempt to use any sort of identification strategy to get at a causal interpretation of the correlations.

Hey, Raj is a MacArthur fellow. He knows this and the paper says it quite clearly:

“the relationships between income and life expectancy should not be interpreted as causal effects of having more money because income is correlated with other attributes that directly affect health. ┬áBecause of such unmeasured confounding factors, the causal effects of income on life expectancy are likely to be smaller than the associations documented in this study. In addition, the local area variation need not reflect the causal effects of living in a particular area and may be driven by differences in the characteristics of the residents of each area. Although the correlational analysis in this study cannot establish causal mechanisms, it is a step toward determining which theories for disparities in longevity deserve further consideration.”

That is to say, low income people smoke more, drink more, and have greater obesity rates than do high income people. That is also to say that there may be some other factor that is causing both the income outcome and the mortality outcome so just changing income would not change mortality.

The massive caveat quoted above is in the second to last paragraph of the piece. I guess the press and JAMA’s publicity machine didn’t get that far in their reading.

Such a lack of identification is generally a fatal flaw in top economics journals, which may well be why the paper appears in a medical journal.

So people, anyone trying to tell you that the Chetty et al paper proves that we need to do X is abusing the paper and just appealing to authority in favor of their own preferred policies.

The paper does not provide an easy answer and indeed there are not any easy answers that we can point to.