Economics - General

The Value of End-of-Life Medical Care

Some estimates claim that one-quarter of life-time spending on medical care occurs in the last year of an individual’s life.  Conventional wisdom says this is inefficient, but a paper by Philipson, Becker, Goldman and Murphy (2010) disagrees.  Individuals at the end of their life place very high value on terminal medical care for the following reasons:

  1. If resources have no value when dead, a self-interested individual would be willing to forego his entire wealth to extend his life.
  2. The preservation of hope raises the value of life.  The authors claim that if a patient is given a death sentence in 6 months, he values those 6 months less than if he knew he would live after that.
  3. The social value of terminal care is often greater than the private value.  Adult children (hopefully) places a high value on extending the life of their elderly parents.
  4. The value of terminal care may be the same regardless of a patient’s quality of life.  QALY estimates of the value of life underestimate the utility the elderly receive from being alive, even in a very frail state.

Source: Philipson, Becker, Goldman and Murphy (2010) Terminal Care and The Value of Life Near Its End, NBER Working Paper #15649.

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