Gene and Economics Interaction in The Formation of Human Capital. The Case of Obesity

I develop a model of health and human capital formation that takes into account the dynamic interaction between genetic inheritance and parental choices of investment in children. Differences in the genetic makeup of children can induce variations in the implicit cost of inputs and in the production function of human capital. In equilibrium this is mirrored by changes in the incentives to invest. I take the model to the data using the Avon Longitudinal Study of Parents and Children and I focus on a particular facet of health: obesity. Different forms of investment are considered as inputs, notably physical exercise and dietary intake, and I evaluate their interaction with specific genes which have been associated to increases in Body Mass Index in Genome-Wide Association Studies. I find that Gene-Environment interaction (GxE) plays a fundamental role in human capital formation: investments have a different effect on the accumulation of BMI depending on the genotype of the child. Children who are endowed with a particular genetic makeup are at higher risk of obesity when overeating, and yet they tend to display a higher caloric intake. These results are consistent with the findings in genetics and molecular biology showing that the FTO gene is associated with the hypothalamic regulation of food intake, and shed light on the interdependence between genes and economic choices regarding parental investment and human capital formation.