costlyre
12Oct/100

Outspend and extend (your life at $3/hour)

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Of course such lean living almost certainly has an impact on health. If we spend less do we live less?

Put another way, what is the cost of a year of life?

“Priceless”, you say?

Well, these guys,1 who are probably pretty smart, would have you believe that we (and by “we” I mean the American taxpaying public) are willing to pay $129,000 (in dialysis costs) for an additional quality-adjusted year of life.

Seems expensive (or horrifyingly cheap, depending upon your perspective).

But that’s what we’re willing to pay once somebody is already sick; what would an extra dollar in the pocket do for how long we’re likely to live?

By turning to Canada, in which the healthcare is ostensibly free, I’ll derive down to the health-effects of an extra discretionary dollar spent. So somebody in Canada has already followed this line of inquiry.2 It should come as no surprise that the more you earn the longer you live: a top-decile- earning 25 year old male can look forward to a healthy life lasting almost 40% longer than a bottom-decile-earner.

With just a bit of arithmetic (and some sourcing from the Canadian household spending survey) we can convert these earnings into post-tax spending, and see just how important our consumption dollars might be.

Lowest income earners in Canada spend roughly $30 per day3 (seems to be the North American magic number – see prior post). At this level they can expect to live until 62, but for $5 a day more, they could expect to live until 65.

Over the course of a lifetime this works out to a little less than $25,000 per additional year of life, and if you spend more, you get more (though the series suffers from predictably diminishing returns.) You can live 14 additional healthy years at a cost of $100 thousand per.

Lifespan for sale, as low as $3 an hour

Put another way, you can buy 3 additional years of life at less than $3 an hour, the 3 years after that will run at a little more than $4; you’ll pay $7.50 an hour for the next 3 and $14+ for 3 more. By this math if Bill Gates weren’t so foolishly frittering away his net worth on charitable institutions he could expect to live to be 115 years old.

Circling back, what decision are we actually making when giving a patient dialysis at a cost of $129,000 per healthy year lived? Does that make sense when more than half the population can effectively buy additional life-years at less than $65,000 a piece?

(And, of course, it does and it doesn’t. We humans have proven remarkably adept at watching dumb the smoldering flare-sparks, a glass of water at hand, when not three hours later we’ll find ourselves dumping futile bucket after futile bucket into the inferno).

Returning to Mr. Microsoft for a moment, if he were to effectively buy life-years, the final billion dollars spent would net him 25 extra days. A billion instead in the hands of low income earners should net 15.5 million.4 So unless Mr. Gates believes his remaining time on earth to be 600,000x more important than that of the common man, his charitable bent would seem to make a bit more sense.

What does this have to do with how we proles should operate? Well if you’re a 25-year old spending $10,000 per year and looking to get yourself into Guinness, just aim to increase spending by 17% a year (year after year after year). Sure it might be difficult in the twilight of your life (as you spend $70,000 per minute), but it’s certainly a small price to pay to best Jeanne Calment.5

Perhaps more practically, when you’re choosing between the organic banana and the pesticidal alternative, or the car with side-impact airbags versus the used clunker, without, pause a moment to consider that some don’t even have the choice, and remember that for 3 extra bucks you might just net an additional hour on earth.

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  1. Stanford empiric estimate of the value of a life study []
  2. here []
  3. A 2001 datapoint, converting Loonies to USD and inflation-adjusting to 2010 levels []
  4. To say nothing of how far that money could go if properly allocated to strategies that effectively multiply its impact. []
  5. Who was very very old. []
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