ABSTRACT Title of Dissertation: DETERMINANTS OF CHILDHOOD MORBIDITY AND THE ROLE OF MALNUTRITION: EVIDENCE FROM INDONESIA

Title of Dissertation: DETERMINANTS OF CHILDHOOD MORBIDITY AND THE ROLE OF MALNUTRITION: EVIDENCE FROM INDONESIA Shannon Leigh Wilson, Doctor of Philosophy, 2009 Dissertation directed by: Professor Maureen Cropper Department of Economics Professor Anna Alberini Department of Agricultural and Resource Economics Studies that have attempted to examine the impact of early childhood malnutrition on acute illness have failed to adequately establish the causal link from malnutrition to acute illness. The empirical challenge arises because household behavioral decisions that influence investment in a child's nutrition and growth are very likely correlated with other household decisions that affect a child's incidence of illness. These include decisions to invest in hygiene and sanitation or a mother’s knowledge and use of appropriate feeding practices. There may also be unobserved risk factors, such as genetic endowments, which introduce correlation between one of the regressors – nutritional status – and the error term in a disease production equation. In this dissertation, I test two basic hypotheses: (1) chronic undernutrition in early childhood, as measured by stunting in children under five, increases the probability of contemporaneous acute illness; and (2) there is a significant effect of early childhood malnutrition on the probability of developing acute illness later in childhood. I estimate a model that predicts the incidence of febrile, diarrheal and respiratory disease, diseases which combined account for the greatest total burden of morbidity and mortality in children in developing countries. I focus my research on contemporaneous and longer-term acute illness outcomes in children under five for three reasons. First, substantial research has shown that children are at greatest risk of malnutrition in the early years of life, particularly before age two (Victora et al. 2008; Ruel et al 2008). In this period, children are no longer exclusively breastfeed and they have high nutritional requirements because they are growing quickly. Second, the burden of infectious disease is disproportionately borne by children under five due to their relatively immature immune systems and their dependence on caregivers to use appropriate feeding and hygiene practices to avoid infection (Martorell 1999; Martorell and Habicht 1986). Third, since most of the literature on the long-term consequences for human capital formation focuses on conditions in early childhood, by placing this research question in the same context, it can be more clearly seen as contributing to the broader literature on human capital formation. I employ instrumental variables to allow identification of the impact of early childhood malnutrition on acute illness. I use a panel dataset from three waves of the Indonesian Family Life Survey (IFLS) to address the measurement challenges that arise due to the unobservable household factors that influence both the likelihood of early childhood malnutrition and acute illness, and the synergistic nature of malnutrition and infection. My results show a strong and statistically significant contemporaneous effect of malnutrition on the likelihood of acute illness. I find that children under five who are stunted are 16 percent more likely than children who are not stunted to report symptoms of acute illness. I find that the impact of malnutrition on the likelihood of acute illness remains positive and significant four years into the future. Children who were stunted in 1993 are still 5 percent more likely than non-stunted children to experience acute illness in 1997. While I find this impact of early childhood stunting on future illness outcomes dissipates seven years later, I present suggestive evidence that this may reflect the fact that many of the children in my sample who were stunted in 1993 are in fact no longer stunted by 2000. Overall, these results suggest that efforts at reducing early childhood malnutrition can lead not only to immediate health benefits in terms of lower rates of infectious disease, but also lead to better health outcomes in the future. Many international organizations and bilateral donors are prioritizing improvements in early childhood nutrition with the goal of improving long-term human capital outcomes (World Bank 2002; USAID 2008). The most important implication of my results is that improvements in early childhood nutrition and reducing the burden of disease are complementary objectives; improved early childhood nutrition will facilitate meeting the Millennium Development Goal of reducing the burden of disease. Further, to the extent improvements in pre-school nutritional status reduce either the incidence of acute illness, the severity of acute illness episodes, or both, such improvements may have indirect benefits. These include reducing school absenteeism which likely will enhance the acquisition of knowledge at school and lead to higher school completion rates among children in developing countries.