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Sources of U.S. Longevity Increase, 1960-1997

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  • Frank R. Lichtenberg

Abstract

Between 1960 and 1997, life expectancy at birth of Americans increased approximately 10% - from 69.7 to 76.5 years - and it has been estimated that the value of life extension during this period nearly equaled the gains in tangible consumption. We investigate whether an aggregate health production function can help to explain the substantial fluctuations in the rate of increase in longevity since 1960. We view longevity as the output of the health production function, and output fluctuations as the consequence of fluctuations in medical inputs (expenditure) and technology. We estimate longevity models using annual U.S. time-series data on life expectancy, health expenditure, and medical innovation. Reliable annual data are available for only one type of innovation - new drugs - but pharmaceutical R&D accounts for a significant fraction of total biomedical research. The empirical analysis provides strong support for the hypothesis that both medical innovation (in the form of new drug approvals) and expenditure on medical care (especially public expenditure) contributed to longevity increase during the period 1960-1997. The estimates imply that the medical expenditure needed to gain one life-year is about $11,000, and that the pharmaceutical R&D expenditure needed to gain one life-year is about $1,345. Previous researchers have estimated that the average value of a life-year is approximately $150,000.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8755.

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Date of creation: Jan 2002
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Publication status: published as Lichtenberg, Frank R. "Sources Of U.S. Longevity Increase, 1960-2001," Quarterly Review of Economics and Finance, 2004, v44(3,Jul), 369-389.
Handle: RePEc:nbr:nberwo:8755

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  1. Lichtenberg Frank R., 2002. "The Effects of Medicare on Health Care Utilization and Outcomes," Forum for Health Economics & Policy, De Gruyter, De Gruyter, vol. 5(1), pages 1-29, January.
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Cited by:
  1. Cervellati, Matteo & Sunde, Uwe, 2013. "The Economic and Demographic Transition, Mortality, and Comparative Development," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9337, C.E.P.R. Discussion Papers.
  2. Joseph Cook & Graeme Hunter & John Vernon, 2009. "The Future Costs, Risks and Rewards of Drug Development," PharmacoEconomics, Springer, Springer, vol. 27(5), pages 355-363, May.
  3. Maarten Lindeboom & France Portrait & Gerard J. van den Berg, 2003. "Individual Mortality and Macro-Economic Conditions from Birth to Death," Tinbergen Institute Discussion Papers 03-072/3, Tinbergen Institute, revised 14 Oct 2003.
  4. Brunello, Giorgio & Michaud, Pierre-Carl & Sanz-de-Galdeano, Anna, 2008. "The Rise in Obesity across the Atlantic: An Economic Perspective," IZA Discussion Papers 3529, Institute for the Study of Labor (IZA).
  5. James A. Thornton & Jennifer L. Rice, 2008. "Does Extending Health Insurance Coverage to the Uninsured Improve Population Health Outcomes?," Applied Health Economics and Health Policy, Springer Healthcare | Adis, vol. 6(4), pages 217-230.
  6. Louise Sheiner, 2009. "Intergenerational aspects of health care," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2009-38, Board of Governors of the Federal Reserve System (U.S.).
  7. John Vernon & Joseph Golec & J. Stevens, 2010. "Comparative Effectiveness Regulations and Pharmaceutical Innovation," PharmacoEconomics, Springer, Springer, vol. 28(10), pages 877-887, October.
  8. Ivaschenko, Oleksiy, 2004. "Longevity in Russia's Regions: Do Poverty and Low Public Health Spending Kill?," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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