Terminal Care and the Value of Life Near its End

29 Pages Posted: 18 Jan 2010 Last revised: 6 Apr 2023

See all articles by Tomas Philipson

Tomas Philipson

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

Gary S. Becker

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

Dana P. Goldman

National Bureau of Economic Research (NBER); University of Southern California

Kevin M. Murphy

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

Multiple version iconThere are 2 versions of this paper

Date Written: January 2010

Abstract

Medical care at the end of life, 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. However, though many observers have claimed that such spending is often irrational and wasteful, little explicit analysis exists on the incentives that determine end of life health care 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 theoretical and empirical analysis of the value of life do not apply, and often under-values, the value of life near its end and terminal care. We argue that several factors drive up the value of life near its end including the low opportunity cost of medical spending near ones death, the value of hope including living into new innovations, and the potential positive effect of on the value of life from being frail. We calibrate the ex-post value of hope associated with treatments for HIV patients to be as much as four times as high as standard per-capita estimates of treatment effects and as many as two and a half times as high as aggregate values across all cohorts.

Suggested Citation

Philipson, Tomas J. and Becker, Gary S. and Goldman, Dana P. and Murphy, Kevin M., Terminal Care and the Value of Life Near its End (January 2010). NBER Working Paper No. w15649, Available at SSRN: https://ssrn.com/abstract=1537768

Tomas J. Philipson (Contact Author)

University of Chicago ( email )

Graduate School of Business
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National Bureau of Economic Research (NBER)

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Gary S. Becker

University of Chicago - Department of Economics ( email )

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University of Chicago - Booth School of Business

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Dana P. Goldman

National Bureau of Economic Research (NBER) ( email )

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University of Southern California ( email )

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Kevin M. Murphy

University of Chicago ( email )

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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

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