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Feb 18, 2010
More than economists have traditionally supposed, according to a NBER paper by Tomas Philipson, Gary Becker, Dana Goldman and Kevin Murphy. In contrast to the conventional view that we are spending excessively on end-of-life care, the economists argue we may be underestimating the value of end-of-life care for four reasons:
- Diminishing marginal utility — a year of life is worth more to us if there are fewer years of life to live.
- The value of hope — during the six months your life is extended, new discoveries may be made, allowing more extension.
- The social value of terminal care is greater than the private value — in addition to the value you place on a few more months of life, your family members care and so do taxpayers (which is why we spend so much Medicare and Medicaid money on terminal care).
- The rational level of spending on terminal care by people who are frail (have a low quality of life) may be greater than for someone who is healthy.
8 Responses to “How Much is a Year of Life Worth at the End of Your Life?”
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Helium
February 18th, 2010 at 5:08 pm
Fascinating. I’ve never seen anything like this before.
February 18th, 2010 at 5:24 pm
Agree with Vicki. This is fascinating. It’s very original, very creative, very innovative, and quite possibly true.
February 18th, 2010 at 5:26 pm
Very clever. Very good.
February 18th, 2010 at 5:44 pm
It makes sense that a 35-year old individual would trade (to increase utility), a year of life 50 years out more cheaply than someone 84-years of age.
February 18th, 2010 at 6:05 pm
This is really interesting. Not sure I agree. I have to think about this.
February 18th, 2010 at 7:16 pm
The less an individual has of a good the more he values an additional unit–marginal utility theory strikes again.
February 18th, 2010 at 10:57 pm
I agree… but only partly.
The study probably assumes that people are healthy and relatively lucid until a few weeks before death. This is not always the case. A lot of seniors go through a horrible, painful period leading up to death. I’ve heard of numerous cases where they want to die, but their relatives or doctors want to try one more treatment.
Also, a good deal of seniors die with significant mental impairment. You’re talking serious deterioration. I’m not sure that marginal utility applies to a person who has forgotten how to swallow.
But, still, we all know of the person who doesn’t want to die, who hangs on and on, who fights letting go. And I think that life does get more precious as you age. Young people are too busy having kids and running their careers to contemplate end-of-life issues. It still seems like there is a lot of time.
But, time is relative. A human life span is 80 years, and the earth is how old? That really puts the last year in perspective. On the other hand, a butterfly lives for one summer. As Kurt Vonnegut would say, “So it goes.”
February 21st, 2010 at 5:55 pm
Fascinating. People have not been thinking clearly about this. Maybe that’s because we are paying more for the end of life care of others than we really want to.