Abstract

http://ssrn.com/abstract=1008825
 
 

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The Value of Life Near its End and Terminal Care


Gary S. Becker


University of Chicago - Department of Economics; University of Chicago - Booth School of Business

Kevin M. Murphy


University of Chicago; National Bureau of Economic Research (NBER)

Tomas Philipson


University of Chicago; National Bureau of Economic Research (NBER)

August 2007

NBER Working Paper No. w13333

Abstract:     
Medical care at the end of life, which is often is estimated to contribute up to a quarter of US health care spending, often encounters skepticism from payers and policy makers who question its high cost and often minimal health benefits. It seems generally agreed upon that medical resources are being wasted on excessive care for end-of-life treatments that often only prolong minimally an already frail life. However, though many observers have claimed that such spending is often irrational and wasteful, little explicit and systematic analysis exists on the incentives that determine end of life health care spending. There exists no positive theory that attempts to explain the high degree of end-of life spending and why differences across individuals, populations, or time occur in such spending. This paper attempts to provide the first rational and systematic analysis of the incentives behind end of life care. The main argument we make is that existing estimates of the value of a life year do not apply to the valuation of life at the end of life. We stress the low opportunity cost of medical spending near ones death, the importance of keeping hope alive in a terminal care setting, the larger social value of a life than estimated in private demand settings, as well as the insignificance in quality of life in lowering its value. We derive how an ex-ante perspective in terms of insurance and R&D alters some of these conclusions.

Number of Pages in PDF File: 21

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Date posted: August 24, 2007  

Suggested Citation

Becker, Gary S. and Murphy, Kevin M. and Philipson, Tomas, The Value of Life Near its End and Terminal Care (August 2007). NBER Working Paper No. w13333. Available at SSRN: http://ssrn.com/abstract=1008825

Contact Information

Gary S. Becker
University of Chicago - Department of Economics ( email )
1126 East 59th Street
Chicago, IL 60637
United States
University of Chicago - Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Kevin M. Murphy (Contact Author)
University of Chicago ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7280 (Phone)
773-702-2699 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Tomas J. Philipson
University of Chicago ( email )
Graduate School of Business
1101 East 58th Street
Chicago, 60637
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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