The Political Economy of the Longevity Dividend
Posted by Jeriaska on February 28th, 2008
Public critics of radical life extension have made such various claims as “There is no known social good coming from the conquest of death,” and “The finitude of human life is a blessing for every individual, whether he knows it or not.” Ronald Bailey, who servers as science correspondent for Reason Magazine, set out to refute these assumptions in his talk at the 2007 event held by the Institute for Ethics and Emerging Technologies entitled “Securing the Longevity Dividend” by noting the wealth of research suggesting that the trend toward increasing lifespan has resulted directly in greater overall wealth and social good.
The following transcript of Ronald Bailey’s July 23, 2007 talk “The Political Economy of the Longevity Dividend” has been corrected and approved by the author. Audio is also available, courtesy of the Institute for Ethics and Emerging Technologies.
The Political Economy of the Longevity Dividend
Is longevity affordable? There are a whole bunch of people out there who say, “Well, actually no.” I know some people don’t like to read some of these things, but here we have Francis Fukuyama at the AAAS conference saying, “Life extension seems to be a prefect example of something that seems to be a negative externality, meaning that it is individually rational and desirable but it has costs for society that can be negative.”
Daniel Callahan, another one of my bête noires, once said at a conference in Philadelphia, “The worst possible way to resolve this issue is to leave it up to individual choice. There is no known social good coming from the conquest of death.” I’m going to show that there might be a few, anyway.
Then, of course, Leon Kass, who has stepped down after doing as much damage as he could as the chairman of the Council. Kass did write in First Things, “The finitude of human life is a blessing for every individual, whether he knows it or not.” You first, Leon. In any case, this idea is out there in the mainstream. I don’t think that the funeral industry is about to go out of business, unfortunately.
So, is living longer a “negative externality”? These are fairly sophisticated philosophers that were talking here, and I would like to remind them, of course, that Thomas Hobbes addressed this issue in The Leviathan when he pointed out that individuals form societies in order to help them avoid things like having lives that are solitary, poor, nasty, brutish and short. In other words, society exists for the happiness of individuals–we don’t exist for the happiness of society.
In the short time I have here I am going to show you some of the available evidence that is out there, and again, this is going to be a reporter’s quick survey of this kind of thing. I am not an economist, nor am I a doctor, and I don’t play them. I just report what they do. But I’m going to show that the benefits of an increased lifespan easily outweigh the costs, which we have already seen. For the most part longevity treatments are likely to be affordable, which I think is very key, and longevity will help solve social and economic problems.
How do we know that increased longevity is worth it to society and not just individuals? Nobel Prize economics laureate Robert Fogel has pointed out in the last few hundred years humanity has embarked on what he calls the techno-physio-evolution, during which human beings have gained an unprecedented degree of control over their environment, a degree of control that sets them apart from all other species, but also from all other previous generations of Homo spiens. As a result of increased scientific and technological progress and greatly improved nutrition and sanitation, a good portion (and this room is full of, by the way, people who belong to that good fortune) has already increased their average body sizes by 50% and their lifespans by 100%.
Yale University economist William Nordhouse has estimated that the longevity increases in the West account for 40% of gross national product. Why? Not just because people work longer, but because they work smarter. They have more human capital that allows for that accumulation. Human capital is the knowledge, the skills, the competencies of people in a society. Unlike structural capital, human capital is always owned by individuals who have it–that is, those of us who keep living–and human capital’s value is a renewable part of intellectual capital. It is a constant source, if you will, of creativity, innovation, and the ability to change. In addition, one of the things that has not been discussed, we have talked a little bit on discount rates, but longer lives increases people’s planning horizons–that is, the more highly you value the future over the present.
We will now look at some of the research that was mentioned briefly by Kevin Murphy and Robert Topel. What we find here is, this is this is what happened to life expectancy in the United States from 1900 to 2000, also life expectancy for males and females at age fifty. One of the things that they point out is, and this has already been pointed out by Dr. Olshansky, is a great deal of the increasing life expectancy before 1950 occurred among young people, largely through the control of infectious diseases, but Topel and Murphy also argue that a good deal of the latest increase has been at the other end of the age scale.
One of the things they point out is that life expectancy in America has increased by roughly thirty years. In 1900, nearly 18% of males born in the United States died before their first birthday. Today, it is not until age 62 that cumulative mortality reaches 18% among males. Murphy and Topel showed that this remarkable increase in longevity reflects progress against a variety of inflictions which we have discussed already. The gains have been enormous. If people would be willing to pay for that extra thirty years of life, the way they calculate it, it adds up to as much as $1.2 million in order to achieve that. We have had an enormous amount of value already out of this.
One of the things they look at is the aggregate economic gains from reductions in mortality. They do it by decade, but the important number to remember is that over the period of that time what we found in the United States is that there was $95 trillion worth of value created by increasing longevity. This is value not just in the economy itself, but also in what you might call “full consumption,” things for leisure or education that people want to spend their time on. The way you would calculate that kind of price is to imagine how much they would have earned had they decided not to take that leisure. It’s a shadow price, if you will.
How much did it cost to get this? The number here is the increase in expenditures that have been capitalized over that time, and it cost $34 trillion to do that. So, what do we get? Between 1970 and 2000, the increased longevity yielded a pretty good net gain, I would say. One of the things I should point out is that these numbers are always looking at income. There are other ways of valuing this. They also estimate that a permanent 1% reduction in cancer rates has an increased present value to current and future generations of $500 billion per year. A cure for cancer would be worth $50 trillion to all current and future generations.
What do we have here? Are we spending enough money on mortality reduction research? Well, I agree with everyone who has already talked this morning–no, we’re not. Again, part of their calculation is the value of the reduction of 10% of all current mortality would be worth $18 trillion. I want to point out that about $100 billion per year is spent on biomedical research in the United States and approximately two-thirds of that comes from the private sector. In fact, in the United States, the latest numbers I’ve seen is that we spend 5.6% of all of our medical expenditures on research, which is the highest in the world. But, in any case, it is not nearly enough.
What is the value of increasing health span? This is something that has come up already. Here is a kind of quality of life argument that Topel and Murphy are making. What you have seen over that period of time is that you have shifted out the value of quality of life. A 55 year-old in 2000 is equivalent to a 49-year old in 1970.
But can we afford anti-aging treatments? Already there are nay-sayers who have argued “No.” In 2005, Professors Charles McConnell and Leigh Turner argued, “In higher income countries, there appears to be little room for optimism that the social benefits of an anti-ageing breakthrough will exceed the societal costs.” Well, I would beg to differ with them. Here is a calculation that our dear friends Charles Mann in his article on “Death Shortage” came up with. In his article, he said, imagine this horrible situation where there is an anti-aging treatment that costs $15,000 a year and we have 80 million old Americans that want it, and it will cost $1.2 trillion a year. Then, he quotes a guy from the Center of Disease Control named James Lubitz who says, “It’s the kind of number that gets people’s attention.”
There is another way of looking at it. The Employment Policy Foundation did a calculation back in 2003 where it looked at what the U.S. GDP is likely to be in the year 2075. They estimated that it would be $128 trillion. Assuming that these treatments are $15,000, that would be less than 1% of GDP. I think we could afford that. We are already affording 16% of our GDP on health care, anyway. This would dramatically reduce those expenditures, if this kind of thing worked. Let’s assume the worst-case scenario that we start giving these anti-aging treatments to everybody, and that would cost $7.2 trillion. It would be less than 7%. Again, we are spending 16% on health care now. It does seem that this would be affordable.
You may say, $128 trillion, that’s crazy talk. How could that possibly happen? The truth of the matter is that the American economy did it already. It grew tenfold over the period between 1929 and 2000. As a chief economist at the Employment Policy Foundation said, “Having per capita personal incomes of $150,000 in 2077 is no more fantastical than where we are today than it would have been to my grandmother.”
One of the things I would like to take a look at is, What kind of treatments are out there? I was at a conference two weeks ago with the co-founder of Sirtris Pharmaceuticals, a guy named David Sinclair. Last week the report just came out that they are having fairly successful Phase Ib trials. He suggested that they have a compound that is 1700 percent more powerful than resveratrol, the antiaging compound found in wine. In other words, you won’t have to drink a thousand bottles of red wine to get the anti-aging effects. That could just be for pleasure. There are other ways of doing this; there is the more expensive services way. There is a company called Gencia that is working on what they call “the future of mito-flushes.” I don’t know if it will work, but it sounds as if progress may be being made.
What will people with dramatically longer life expectancies do? Frankly, I don’t know. Surely, the same question might have been asked by our ancestors: what will those people living to 70 or 80 do all the time? I think that it shows a stunning lack of imagination on the part of the pro-mortalists who ask that question. One of the things that happens of course is that the shape of the life cycle changes dramatically. It won’t be compressed mortality, necessarily, if it works the way some of us would hope, but you would have more human capital over time and more ability to be productive in all the sorts of ways that would be useful for society in market and non-market ways.
Nobelist Robert Fogel points out that in 1875, spending for food, clothing and shelter counted for 75% of what he calls “full consumption.” In the good old days of 1870’s, people got to spend 18% of their consumption on leisure, and the vast majority of it on keeping body and soul together. My great-grandfather Halsy Bailey, who was an illiterate coal miner about then, was a man of his prime at around 1900. He would have lived in a world where the U.S. GDP was $325 billion… it’s $13 trillion now. It was a world without cars, electricity, airplane, trucks, refrigerators, air conditioners, television, radio, radar, lasers, computers, internet, antibiotics, transplant surgery, in vitro fertilization, just about everything. In fact, I think life itself was impossible in the 19th century, but apparently they managed somehow.
I imagine that he would have a great deal of puzzlement thinking about how his great grandson makes his living. He sits in a climate controlled house, looks at a screen, types occasionally, and the money comes in… not very much–I work for a non-profit. (I grew up on a dairy farm and my farming relatives would occasionally ask me, “What is it again that you do for a living?”)
What I’m trying to get across is that trying to imagine the technologies and opportunities for people seventy years hence is impossible, in a certain way, as it would be for my great-grandfathers to have done for us today. To make the assumption, as the pro-mortalists do, that people would while away their time watching sitcoms, I don’t think that that’s necessarily on, especially if you are healthy and vigorous. If your mind is still with you, you will want instead to start a new business, or education. There are lots of other opportunities.
Again, recall in 1875, 75% of what Fogel calls expanding consumption went to food, clothing, shelter and a little bit of leisure. Today, 67% is devoted to what Fogel calls “leisure.” In 2040, Fogel believes the average household will have to work only 300 hours per year to maintain the same level of food, clothing and shelter that we currently enjoy. I assume that many of them will want more than that, but if you want to live on the relative poverty that we all subsist in here it will take working 200 hours per year. That would leave a lot of time for people to pursue other goals besides earning their daily bread. Leisure will expand and people will spend it on things like education, helping the poor, and solving social problems.
On the other hand, pro-mortalist Fukuyama does say with considerable condescension that he thinks that individuals who live longer will “be eager to continue his or her mediocre life for as long as possible, without worrying about some of these higher questions about what life is used for.” Thank you, Frank.
Anyway, longer lives, will they solve the social problems? First of all, with technologies, we invent them and we find out, because we don’t know how useful they are going to be initially. This is why I think technology assessment, while a fun, amusing enterprise is not usually very useful. I’ll give you the example of the laser. The guy who invented the laser in 1960 basically said, “I invented something that I have no idea what it’s used for.” And nobody did know what a laser would be useful for. Now we see, it fixes our eyes, it plays our CDs, it levels our fields… basically lasers are ubiquitous. This is one of the things about these technologies. It will help solve all sorts of problems we didn’t even know we had, much like lasers.
What about poverty? One of the things I should point out is this decreasing discount rate means that people who will be living a hundred years or two hundred years, we hope, will also have a much greater future orientation. They will be thinking about environmental problems in the long term. They will be thinking about the kind of world that they themselves would want to be living in–hopefully a more peaceful world than the one we currently live in. They will be striving also to lift people out of poverty, because that is after all a social irritant that causes problems for those who would want to live a more comfortable, interesting life in the future.
One of the things that we do know is that long life, as we already pointed out, does in fact help alleviate poverty. This is something that a lot of people don’t seem to know. Because of the one-child policy in China, in East Asia they are going to be much worse off than we are with their age wave. By 2020, China will have a much worse Baby Boom problem than we do, unless longevity can make us not older longer but younger longer. The RAND Corporation announces mounting research indicates that a healthy population can abet economic growth and lessen poverty, contrary to the longstanding belief that causation runs only from wealth to health.
In other words, health helps you improve wealth. One of the things that Topel and Murphy point out is that it is a virtuous circle. The healthier you are, the wealthier you can become, the more you will be willing to spend on health, and it continues on and on, I hope forever. But we’ll see.
What about terrorism? I don’t know the mind of a terrorist, but the fact is that terrorism does seem to be a young person’s game. Very few sixty-year olds are going around blowing up people. Part of the reason might be, as a recent study at Harvard points out, patience appears to increase across the lifespan, with the young showing markedly less patience than the middle aged and older adults. Those of you with children will have recognize that without the empirical data that the Harvard people come up with.
I would like to conclude that I think it is easily the case that these kinds of treatments are very likely to be affordable. The pro-mortalists fail to understand the effort to extend healthy human lifespan is a perfect flourishing of our uniquely human nature. The future generations will look back at the beginning of the 21st century with astonishment that some very well meaning and intelligent people actually wanted to stop biomedical research just to protect their cramped and limited vision of human nature. Those future generations will look back, I predict, and thank us for making their world of longer, healthier lives possible. To end, let me quote Sirtris Pharmaceuticals co-founder David Sinclair who said, “I would be disappointed if we were all born one generation too early.” Me too.
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