Holy fuck, WordPress, what have you done to your admin interface?
Harold Pollack points us to some research on the value of a year of life:
- More on the value of health and longevity (The Incidental Economist)
There’s a simple integral model of utility as a function of health, which yields some interesting results when applied to real data:
Not to get all gooey and sentimental, but the value of a year of life at any age is simply the marginal rate of substitution between mortality risk and one’s financial assets.
That kicked over my giggle box. Does anyone else chuckle at stuff like this?
Given this, one can calculate the value of a statistical life and individuals’ willingness to pay for improvements in health.
When Murphy and Topel marry their mathematical model to available data, they find that Americans are willing to pay a surprising amount for a healthy year of life. Moreover the values vary over the life course. Murphy and Topel find that the value of a single life-year peaks at over $350,000 around age 50—a figure that drops by more than half by age 80 but still exceeds $150,000 per year. Why the variation? People have varying health status over time. All else equal, it’s more fun to be 25 than to be 75. Earnings capacity matters, too. If I buy myself an extra year of healthy life at age 45, my higher wage allows me to purchase more fun experiences than I could finance at age 20 or at age 80.
Playing out these analyses demonstrates that our improved health and longevity have brought huge economic gains.
One wonders if this factors into Tyler Cowen’s Great Stagnation theory.
Post-1970 gains are less dramatic. The benefits still amount to hundreds of thousands of dollars per middle-aged person. As David Cutler and colleagues have explored, a surprisingly large chunk of recent gains is associated with reduced male heart disease mortality. Murphy and Topel find that post-1970 health gains are estimated to have “added $3.2 trillion per year to national wealth.”
Okay, yeah, maybe a little.
The funny thing about this analysis is that a lot of the health-improving interventions I’ve been bringing up lately are roughly cost-neutral. Sure, buying grass-fed beef instead of a Subway sandwich or getting a membership at a decent gym costs more, but I don’t think I could substitute hundreds of thousands of dollars on Eleiko plates and ribeye and still see a noticeable marginal return to my health. But hey, we’re building a model.
Megan McArdle wonders what life will be like without universities:
Good stuff and impossible to excerpt. Go have a read.
Eric Crampton ponders a life of (academic) work:
- Why retire? (Offsetting Behaviour)
Don Boudreaux snarks wonderfully at the New York Times:
- Minimum understanding (Cafe Hayek)
Noting that “New York is an expensive place to live,” you call upon the legislature there to raise New York’s hourly minimum-wage from $7.25 to $8.50 (“Raise New York’s Minimum Wage,” Feb. 13).
In the same spirit of demanding that government improve people’s economic well-being simply by ordering that people be paid more, allow me to make a similar plea on your behalf.
The newspaper business today is in difficult straits. So I hereby call upon the legislature in Albany to force you and other newspapers in New York to raise your subscription and advertising rates by 17.2 percent (the same percentage raise that you want to force low-skilled workers to demand from their employers). Voila! If your economic theory is correct, your profits will rise.
Finally, Karl Smith waxes pessimistic and hands out some fantastic wisdom:
- Notes on life, notes on Greece (Modeled Behavior)
Understanding that things won’t work out in the end helps you take a more level headed approach to things that are happening now.
My case in point on this is Greece. Greece’s “insolvency” was handled extremely poorly. Its an example of folks choosing policy that makes almost everyone poorer and the poor relatively.
As a note, I know some people will find this all confusing because you can’t tell whose side I am on. My point is beyond all that.
My point is that the entire paradigm is wrong. There is no “we just have to” either for reigning in spending or maintaining the welfare state. Nor have there been any consequences so discontinuous as to be approximated by “we just have to.”
A fellow could get smart reading that blog.