Alaska News

Does the PFD make Alaska babies bigger?

The annual Alaska Permanent Fund dividend fattens more than bank accounts, according to one new study from South Korea.

The annual dividend payout has helped increase birth weights for Alaska newborns, argues the study, which was authored by economists at Hallym University in Chuncheon and Korea University in Seoul and published in the journal Economic Inquiry.

The infusion of money "modestly improves newborns' health at birth," increasing weight by 34.8 grams (1.23 ounces) and reducing the likelihood of low birth weight by 14 percent in the early years of the dividend program, according to the statistical study by the authors. Lower birth weights are correlated with higher rates of infant mortality and a variety of negative health and social outcomes later in life.

The study is limited to the period from 1978 and 1984, the last years before the dividend payout began but was anticipated and the first three years afterward, when Alaskans received what might be considered an "income shock."

In particular, the first dividend of $1,000 a person in 1982, worth $2,331 in 2011 dollars, was a "significant income shock," the study says. With the average household size of 2.83 people at the time, the first dividend represented 10.4 percent of median family income in Alaska, it notes.

The study compared Alaska birth outcomes to those of other states during the period, singling out three that were that were similar enough to Alaska to be "synthetic" controls with no payout similar to the dividend -- South Dakota, Maine and Nevada. The authors also considered some medical data, including reported first prenatal visits, which advanced 2.46 days on average during the pre-dividend "anticipatory period" and 2.25 days in the early dividend "realized period." The earlier start to prenatal visits did not have an effect on total prenatal visits, they found.

They also analyzed Apgar scores for newborns, the tests of vital signs and reflexes performed right after a baby's birth, and found they rose slightly once the dividend payout started. But some important medical data, such as maternal smoking rates or alcohol consumption, was not available for the study.

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The authors, who have been examining the dividend and other forms of "money transfer" for several years, likened the beneficial health impacts to those seen from of other pulses of new income like boosts in the earned income tax credit, which helps low-income families.

But one Alaska baby expert was skeptical about the findings.

"It's an interesting study. But I would take it with a grain of salt," said pediatrician Matt Hirschfeld, medical director of maternal child health at the Alaska Native Medical Center. "It seems like a big stretch."

The study period coincides with a time of big social and economic change in Alaska, including big improvements in medical care for expectant mothers and babies, he said. Providence Alaska Medical Center started what is now the state's only Level III neonatal intensive care unit during that time, he noted.

Alaska economists also expressed doubts about the Korean study's findings.

"That's some pretty strange research," said Neal Fried, a senior economist at the Alaska Department of Labor and Workforce Development.

He said he credits the Korean economists for trying to do something that Alaskans failed to do when they had a chance -- track changes in behavior from the beginning of the dividend program. Doing that requires some baseline information, which Alaskans failed to collect before the Permanent Fund dividend became routine, he said.

"There's no doubt that dividends and more money affect behavior," Fried said. But as for whether they affect babies' health, or did so when the dividends were new, "I don't have a clue," he said.

Experts at the University of Alaska Anchorage's Institute of Social and Economic Research said a big hole in the Korean study was its lack of input from any Alaska contributor who could provide context. The study period was a time of tumultuous change in Alaska, including a big increase in public wealth and public services, including medical services, they said.

Because the study period "largely coincides with the state oil revenue boom" and a 30 percent increase in the state's population, the emphasis on the dividend as the economic driver is "somewhat dodgy," ISER economist Mouhcine Guettabi said in an email.

This year's $2,072 dividend arrived in most Alaskans' bank accounts on Oct. 1. Dividends vary widely from year to year as they reflect sometimes-volatile stock market performances. In 2013, the dividend was only $900.

Since the first dividends went out in 1982, the annual payout has become part of the Alaska cultural and social fabric. The phenomenon has also been the subject of numerous studies.

Analysis by Scott Goldsmith, a longtime ISER economist, has cited the dividend as an important factor in reducing Alaska's poverty rate and narrowing the income gap among Alaskans.

One 2003 study suggested the dividend boosted Alaska's birth rate. The study, by an assistant economics professor at the University of Alaska Southeast, said the dividend made residents more likely to decide to become parents or to have more children and that the dividend incentive could account for 17 percent of the state's 2001 birth rate.

If the early dividends boosted Alaska babies' birth weights, that effect may have worn off by now, some new information suggests.

Statistics collected by the Alaska Native Tribal Health Consortium show that rates of low birth weight declined for Alaska babies in the 1980s but have risen in recent years, with the rise paralleling a national trend. Other information collected by ANTHC shows a marked rise in quality of prenatal care in Alaska from 1981 to the early 1990s, but then a plateau in that trend and a recent decline.

Yereth Rosen

Yereth Rosen was a reporter for Alaska Dispatch News.

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