Industries afflicted with Baumol's Disease have slower productivity growth.

Babies and the Elderly

Oct 24, 2011 • Developing Economies, Environment, Government, Households, Innovation, Macroeconomic Measurement, Thinking Economically • 209 Views    No Comments

The beginning of life and the end of life are becoming more expensive.

  1. The number of premature babies in the U.S. has soared by 36% during the past 25 years. Caused partially by twins, triplets, (and more) from older mothers and by advances in “assisted reproduction,” extremely premature babies born at 28 weeks and sooner need months and sometimes a lifetime of sophisticated medical technology. However, effective neonatal care can also prevent a lifetime of illness. (Here is an excellent New Yorker Magazine article about neonatal science.)
  2. By 2050, close to 27% of the U.S. population will probably be older than 65 and the median age will be 41. Older than we are, Europe and Japan will have a median age that is close to 50 in 2050. Looking at diminished productivity and escalating health care, end of life cost can be high.

The Economic Lesson

Remembering that scarce resources require tradeoffs, how should we cope with the beginning and the end of life becoming more costly?

The health care expense of pre-term babies, at $18 billion, is estimated to be half the total spent on newborn care. Here, a Peterson Institute report cites health care for aging populations as a major source of governments’ budget pressures.

With economic cost defined as sacrifice, beyond finance, the cost of preserving life for the very young and the very old becomes even more expensive.

An Economic Question: Knowing that all societies can allocate a limited supply of land, labor, and capital to health care, what tradeoffs would you support?

 

 

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