We develop an economic framework for valuing improvements to health and life expectancy, based on individuals' willingness to pay. We then apply the framework to past and prospective reductions in mortality risks, both overall and for specific life-threatening diseases. We calculate (i) the social values of increased longevity for men and women over the 20th century; (ii) the social value of progress against various diseases after 1970; and (iii) the social value of potential future progress against various major categories of disease. The historical gains from increased longevity have been enormous. Over the 20th century, cumulative gains in life expectancy were worth over $1.2 million per person for both men and women. Between 1970 and 2000 increased longevity added about $3.2 trillion per year to national wealth, an uncounted value equal to about half of average annual GDP over the period. Reduced mortality from heart disease alone has increased the value of life by about $1.5 trillion per year since 1970. The potential gains from future innovations in health care are also extremely large. Even a modest 1 percent reduction in cancer mortality would be worth nearly $500 billion.
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Length: Date of creation: Jun 2005 Date of revision: Handle: RePEc:nbr:nberwo:11405
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Find related papers by JEL classification: D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory I10 - Health, Education, and Welfare - - Health - - - General I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health J19 - Labor and Demographic Economics - - Demographic Economics - - - Other
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Browning, Martin & Hansen, Lars Peter & Heckman, James J., 1999.
"Micro data and general equilibrium models,"
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 8, pages 543-633
Elsevier.
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