The federal government subsidizes basic and applied research on both the quality of life and the length of life. An example of research on quality is the efforts to find implantable artificial kidneys that can replace dialysis for persons with severe kidney disease since dialysis is a limited and very confining procedure. Research into finding cures for breast and prostate cancers exemplifies research on extending the length of life. It might seem clear that research on extending the lives of frail persons over say age 80 does not produce much value to these persons or to society, but economic analysis of the “value of life” shows that this conclusion is far from obvious.
The main criterion used to measure benefits from all kinds of medical advances is how much individuals affected by these advances, and society as a whole, would be willing to pay for them. Clearly, reducing the incidence of Alzheimer’s disease, or finding drug substitutes for dialysis, would add great value to individuals who would have been victimized by Alzheimer’s or would have been on dialysis. As Posner indicates, however, this does not necessarily imply that putting lots of time and money into developing ways to extend the lives of old people is worthwhile, particularly those who are frail.
On the one hand, the health care delivery systems of the United States and of many other rich countries do not seem able to prevent newly developed expensive drugs, costly surgeries, and other medical interventions from being used to prolong the lives by a tiny amount of very sick elderly persons. It might be better if research spent on these kind of medical innovations went instead to improving the quality of life for other elderly persons, or to helping reduce death rates from cancers, cardiovascular diseases, and other major killers.
On the other hand, even old and frail men and women are often willing to pay a lot for rather small improvements in their expected lifespan. Economists have estimated how much individuals must be paid to be willing to work at jobs with higher death rates, to avoid being involved in deadly traffic accidents, or to take on other life-threatening risks. After manipulating these willingness to pay estimates, the conclusion is that the statistical “value of a life year” to a young or a middle aged American is about $120,000. This is far higher than average earnings in any year- about $45,000 for men who work full time- because the value of life estimate includes the value placed on the many hours not spent at work, and on other sources of utility.
The present value of a reduction in the probability of dying now and at each future age would be worth more to younger persons since older individuals have fewer years of life remaining. But is the value of a “life year” also worth less to the old and perhaps frail? The answer to that is less obvious than may seem (the following analysis is based on work in progress, referred to by Posner, by Kevin Murphy, Tomas Philipson, and myself). Presumably, frail elderly people tend to receive less utility from a year of their current life since their lack of health prevents them from greatly enjoying their leisure time and consumption of different goods. However, the utility cost of any time and money they might spend on prolonging their lives is also lower for them. The fundamental measure of the value of a life year is the ratio of the utility gained to this marginal utility spent on prolonging life. This ratio could even be higher for the old and frail than for healthy younger persons.
In addition, since old and frail people have only a short remaining lifetime, the fear of dying, long recognized as of great importance by novelists and philosophers, is more immediate to them than to younger persons. Their fear of dying could make old people quite willing to spend liberally to delay their deaths even by a few months. Finally, as Posner recognizes, the old would be willing to spend most of their wealth to prolong their lives even by a little bit if they value their lives by a lot more than they value any bequests they would leave to children or others.
Of course, Medicare, Medicaid, and employer health insurance distort many health care decisions in the US since sick individuals mainly pay not their own money, but the monies of taxpayers or of other employees. Medicare, for example, presumably leads to too much spending on the very old because the government ends up financing the great majority of this spending. This is an important determinant of the actual spending on the health of the elderly, but I have argued that many of the old and frail would be willing to spend a lot of their own money to prolong their lives even by a small amount.