TY - JOUR AU - Philipson,Tomas J. AU - Becker,Gary AU - Goldman,Dana AU - Murphy,Kevin M. TI - Terminal Care and The Value of Life Near Its End JF - National Bureau of Economic Research Working Paper Series VL - No. 15649 PY - 2010 Y2 - January 2010 UR - http://www.nber.org/papers/w15649 L1 - http://www.nber.org/papers/w15649.pdf N1 - Author contact info: Tomas Philipson Irving B. Harris Graduate School of Public Policy Studies University of Chicago 1155 E. 60th Street Chicago, IL 60637 Tel: 773/502-7773 E-Mail: t-philipson@uchicago.edu Gary Becker Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 312/702-8254 E-Mail: gbecker@uchicago.edu Dana Goldman Schaeffer Center for Health Policy and Economics University of Southern California 3335 S. Figueroa St, Unit A Los Angeles, CA 90089-7273 Tel: (213) 821-7948 Fax: (213) 740-3460 E-Mail: dana.goldman@usc.edu Kevin M. Murphy Booth School of Business The University of Chicago 5807 S. Woodlawn Ave. Chicago, IL 60637 Tel: 773/702-7280 Fax: 773/834-3554 E-Mail: murphy@chicagoBooth.edu AB - 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. ER -