The Table 4 below presents the decomposition of the total effects of parental schooling into overall income, insurance, monetary, and non-monetary effects using the results of the bivariate probit model.
Table 4: Decomposing Total Effects of Parental Schooling on Child Health in Sample 1 Child Health Parental Schooling (Base: No Degree) Total [%] (a) = (d) + (e) Income [%] (b) Insurance [%] (c) Monetary [%] (d) Non-monetary [%] (e) Physical Mother HSD/GED 6.4 [100] 0.7 [11] 0.8 [13] 1.2 [19] 5.2 [81] College Degree 10.6 [100] 1.2 [11] 1.3 [13] 2.0 [19] 8.6 [81] Father HSD/GED 4.5 [100] 0.5 [10] 0.7 [16] 0.9 [21] 3.6 [79] College Degree 7.4 [100] 1.0 [14] 1.3 [17] 1.8 [24] 5.6 [76] Mental Mother HSD/GED 5.6 [100] 0.6 [11] 0.7 [12] 1.0 [18] 4.6 [82] College Degree 8.8 [100] 1.0 [12] 1.1 [13] 1.7 [19] 7.1 [81] Father HSD/GED 3.3 [100] 0.4 [12] 0.6 [18] 0.8 [24] 2.5 [76] College Degree 5.1 [100] 0.9 [17] 1.1 [21] 1.5 [30] 3.6 [70]
The numbers without the brackets are the effects of parental schooling on child health, measured as the marginal impacts, namely the increase in the probability that the reported health status of the child is Very Good/Excellent as opposed to Poor/Fair/Good category. It should be noted that the income effects of parental schooling in the table show the „overall‟ effects of income, implying that insurance is not controlled for while these effects are being measured, and same is true with the
insurance effects, where income is not controlled for24. The sum of the separate income and insurance effects (columns „b‟ plus „c‟) measured this way is technically greater than the overall monetary effects (column „d‟) by the contribution of the overlapped portion of income and insurance effects (which is very small, less than 0.5 percentage points in probabilities) and is not shown in the table. Clearly, the sum of the overall monetary and the non-monetary effects (columns „d‟ and „e‟) equals the total effects (column „a‟). Also, the numbers inside the square brackets represent the relative importance of each component effect as a share of the total effects (normalized at 100) in each row.
All five measures of the effects of parental schooling increase with the levels of schooling with mother‟s schooling having greater impacts than father‟s and the impacts on physical health of child being slightly larger than on mental health. Both income and insurance effects are much smaller than the non-monetary effects, and are almost equal for both physical and mental health of child for a particular level of parental schooling, and marginally increase with the level of schooling. Most of the beneficial effects of parental schooling on child health are the non-monetary effects, and these are about four-fifths of the total effects for mother‟s schooling and slightly less for father‟s schooling. Accordingly, the overall monetary effects accounts for about one-fifth of the total effects for mother‟s schooling and slightly more for father‟s schooling.
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These income and insurance effects could also be measured by controlling the other each time one is measured, but the general conclusions would not be significantly different, as the effects of income and insurance themselves, as well as their joint contributions are very small.
Figure 5: Decomposing Total Effects of Parental Schooling into Monetary and Non-monetary Effects in Sample 1
Figure 5 pictorially illustrates the decomposition of total effects of parental schooling into the overall monetary and non-monetary effects. The monetary or income equivalents of the non-monetary effects of parental schooling on child health are difficult to estimate. One reason is that the health benefits of a given increase in income may vary widely depending on several factors including the initial level of income that together determine the expenditure patterns of the households. But more importantly, the parents can spend a given endowment of income only once (and it depletes after every spending), whereas the knowledge and information acquired through higher schooling for example can be used multiple times (and may become even more effective after every use). So the computed income equivalents of the non-monetary effects are likely to be underestimated. Nonetheless, just to get a rough idea, the non- monetary effects of a mother‟s having a College Degree (as opposed to having No Degree) is at least as effectual as an increase of income by 6.1 folds (which is 8.6 divided by 1.4, where the former is the estimate for the corresponding non-monetary effects, and the latter is the estimate for the marginal effects on parental income) in terms of lifting the child‟s physical health from the lower to the upper category. Similar equivalent of the non-monetary effects of father‟s having a College Degree can be estimated as an income transfer by 4.0 folds. Similar estimates for mental health are slightly small, about 5.9 and 6.0 folds respectively for mother‟s and father‟s schooling.
In summary, parental schooling plays an important role in determining child health, and the smaller monetary effects and relatively larger non-monetary effects imply that most of the effects of parental schooling on child health transmit through the channel other than the income and insurance, possibly in the form of better access to
relevant health care information, ability to process these information, and increased willingness to implement on these information. I presume that better schooling helps the parents bring about healthy attitudes, tastes and behaviors within the family, prioritize and allocate the resources better, provide timely care of the health related issues, and eventually increase efficiency and child health productivity.
Also, controlling for parental schooling, parental income and insurance type of child can both explain the variation in child health to some degree, where the insurance seems to be more important factor than income. For instance, having any private insurance as opposed to only public health insurance increases the probability of reporting Very Good/Excellent child health status by about 3.9% and 3.4% for physical and mental health of child, while doubling of the income increases these probabilities only by 1.4% and 1.2% respectively (or income needs to be increased by roughly 2.8 folds to achieve similar effects as the private insurance). This should not be interpreted too rigidly however, as various factors including the parental schooling together determine the income and health insurance. Nonetheless, this might suggest that higher parental income is associated with better (private) health insurance of the child, and better child health. Also, almost equal (although small) income and insurance effects of parental schooling, while insurance being relatively more important factor than income, might suggest that parental income in itself is relatively less important than health insurance for child health, but is more closely attributable to parental schooling, and vice versa.