NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Value of Life and the Rise in Health Spending

Robert E. Hall, Charles I. Jones

NBER Working Paper No. 10737
Issued in September 2004
NBER Program(s):   EFG   AG   HE   PE

Health care extends life. Over the past half century, Americans have spent a rising share of total economic resources on health and have enjoyed substantially longer lives as a result. Debate on health policy often focuses on limiting the growth of health spending. We investigate an issue central to this debate: can we understand the growth of health spending as the rational response to changing economic conditions---notably the growth of income per person? We estimate parameters of the technology that relates health spending to improved health, measured as increased longevity. We also estimate parameters of social preferences about longevity and the consumption of non-health goods and services. The story of rising health spending that emerges is that the diminishing marginal utility of non-health consumption combined with a rising value of life causes the nation to move up the marginal-cost schedule of life extension. The health share continues to grow as long as income grows. In projections based on our parameter estimates, the health share reaches 33 percent by the middle of the century.

download in pdf format
   (352 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (352 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10737

Published:

  • Hall, Robert E., and Charles I Jones. "The Value of Life and the Rise in Health Spending." The Quarterly Journal of Economics 122(1): 39-72, February 2007 citation courtesy of
  • Hall, Robert E., and Charles I Jones. "The Value of Life and the Rise in Health Spending." Federal Reserve Bank of San Francisco, FRBSF Economic Letter 2006-02, February 24, 2006
  • Robert E. Hall & Charles I. Jones, 2005. "The value of life and the rise in health spending," Proceedings, Federal Reserve Bank of San Francisco. citation courtesy of

Users who downloaded this paper also downloaded these:
Murphy and Topel w11405 The Value of Health and Longevity
Chandra and Skinner w16953 Technology Growth and Expenditure Growth in Health Care
Becker, Philipson, and Soares w9765 The Quantity and Quality of Life and the Evolution of World Inequality
Acemoglu, Finkelstein, and Notowidigdo w14744 Income and Health Spending: Evidence from Oil Price Shocks
Jones w9325 Why Have Health Expenditures as a Share fo GDP Risen So Much?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us