How Can Japanese Extended Longevity Be Evaluated?An Estimate of a Fruit of Economic Growth(in Japanese)

Masaaki Kawagoe

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: Substantial improvement in health conditions during 35 years from 1970 to 2005 has made Japan one of the top countries for longevity in the world. This paper tries to quantify value of the improvement by willingness-to-pay (WTP) for a decline in death rate during the period, following Murphy and Topel (2003, 2006). Our results show the value may amount to 165 trillion per year, about 30 per cent of GDP. Possible rages of the value of WTP are also shown, depending on parameters of utility function. Effects of demographic changes are examined: an increase in population and progress in ageing with fewer children increase the WTP by 30 and 20 trillion yen, respectively. Looking ahead, a limited additional increase in survival rates, and smaller population, are likely to cut the WTP to about 60 trillion yen in 2040. Furthermore, health expenditures required for extended longevity are estimated to be less than a tenth of the WTP, suggesting their increase could be easily justified by cost-benefit analysis.

Pages: 29 pages
Date: 2009-02
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