Review of Agricultural Economics—Volume 30, Number 3—Pages 379–385 Human Capital Accumulation and Depreciation∗

In the spirit of T. W. Schultz’s contributions to the theory and measurement of human capital, this article discusses the dimensions of human capital, and the technologies used for its accumulation and maintenance. The article emphasizes the role of health as a dimension of human capital that influences the efficiency of acquisition and maintenance of cognitive skills, and the relationship between worker productivity and depreciation of cognitive skills over the life cycle. My first contact with Ted Schultz came when I visited the University ofChicago during the 1966–67 academic year. He was on leave most of that year, but I met and talked to him about development and growth. I was impressed by Ted’s wisdom and prairie practicality, a refreshing counterpoint to the edgy gamesmanship of Milton Friedman and George Stigler. Ted’s strongest influence on me was indirect, through his avatar Zvi Griliches, who taught me the impor-tance of understanding data and the economic circumstances that produce it. A casual observer might think that the econometrics I have developed and taught over my academic career is in the opposite corner from the Schultz-Griliches school, but while we did dispute the productivity of mathematical models and econometric theory, there was never any disagreement on the objectives and re-quirements of sound empirical economics. Given the centrality of human capital in Ted Schultz’s interests, and the impor-tance of his contributions, it is natural in this lecture to comment on this subject. I will refer to the extensive and penetrating research on human capital accumula-tion, but concentrate my remarks on the aspect that touches my own research on health dynamics, the maintenance and depreciation of human skills as we age. When economists introduce the concept of physical capital, they recognize that it is an aggregate that includes durable equipment, fixed plant, intangibles suc