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

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  • Frank Lichtenberg

Abstract

Between 1960 and 1997, life expectancy at birth of Americans increased approximately 10% „G from 69.7 to 76.5 years „G and it has been estimated that the value of life extension during this period nearly equaled the gains in tangible consumption. While life expectancy has tended to increase, there have been substantial fluctuations in the rate of increase. In this paper we investigate whether an aggregate health production function can help to explain the annual time-series behavior of U.S. 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 „G new drugs „G 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. Increased drug approvals and health expenditure per person jointly explain just about 100% of the observed long-run longevity increase.

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  • Frank Lichtenberg, 2000. "Sources of U.S. Longevity Increase, 1960 -1997," CESifo Working Paper Series 405, CESifo.
    • Handle: RePEc:ces:ceswps:_405
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    References listed on IDEAS

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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, vol. 5(1), pages 1-29, January.
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    Cited by:

    1. Matteo Cervellati & Uwe Sunde, 2015. "The Economic and Demographic Transition, Mortality, and Comparative Development," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 189-225, July.
    2. 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.
    3. Erika Laranjeira & Helena Szrek, 2016. "Going beyond life expectancy in assessments of health systems’ performance: life expectancy adjusted by perceived health status," International Journal of Health Economics and Management, Springer, vol. 16(2), pages 133-161, June.
    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 of Labor Economics (IZA).
    5. Louise Sheiner, 2009. "Intergenerational aspects of health care," Finance and Economics Discussion Series 2009-38, Board of Governors of the Federal Reserve System (U.S.).
    6. Casper van Ewijk & Erik Canton & Paul Tang, 2004. "Ageing and international capital flows," CPB Document 43.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. 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).
    8. Gupta, Shivani & Bansal, Sangeeta, 2020. "Health Implications of Obesity: An Evidence from India," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304438, Agricultural and Applied Economics Association.
    9. Oleksiy Ivaschenko, 2004. "Longevity in Russia's Regions: Do Poverty and Low Public Health Spending Kill?," WIDER Working Paper Series RP2004-40, World Institute for Development Economic Research (UNU-WIDER).
    10. Parida Wubulihasimu & Werner Brouwer & Pieter van Baal, 2016. "The Impact of Hospital Payment Schemes on Healthcare and Mortality: Evidence from Hospital Payment Reforms in OECD Countries," Health Economics, John Wiley & Sons, Ltd., vol. 25(8), pages 1005-1019, August.
    11. James Thornton & Jennifer Rice, 2008. "Does extending health insurance coverage to the uninsured improve population health outcomes?," Applied Health Economics and Health Policy, Springer, vol. 6(4), pages 217-230, October.
    12. Joseph Cook & Graeme Hunter & John Vernon, 2009. "The Future Costs, Risks and Rewards of Drug Development," PharmacoEconomics, Springer, vol. 27(5), pages 355-363, May.
    13. John Vernon & Joseph Golec & J. Stevens, 2010. "Comparative Effectiveness Regulations and Pharmaceutical Innovation," PharmacoEconomics, Springer, vol. 28(10), pages 877-887, October.

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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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