The Economics of Death: Crash Course Economics #30

Summary

In this episode of Crash Course Economics, Adriene Hill explores the economic implications of death, focusing on the U.S. economy. She discusses how life expectancy has risen but highlights disparities based on income. The video covers the significant costs associated with dying, from healthcare to funeral expenses, and the economic burden of long-term illnesses like Alzheimer's. It also emphasizes the importance of planning ahead—whether through advance directives, life insurance, or estate planning—to reduce financial strain on families. Ultimately, the episode underscores the societal and personal benefits of addressing death with thoughtful financial preparation.

Takeaways

• 😀 Death is an inevitable part of life, and it has significant economic implications that affect both individuals and society.
• 😀 Life expectancy has generally increased globally, but disparities exist, with people in Africa living on average 12 years less than the global average, and North America having a 21-year gap over Africa.
• 😀 In the U.S., life expectancy has risen over the last 50 years, but income levels significantly impact lifespan, with wealthier individuals living longer.
• 😀 Wealthy individuals in the U.S. tend to collect more government benefits over their lifetimes, averaging $522,000, compared to lower-income individuals, who average $391,000.
• 😀 Longer lifespans can contribute to economic growth as people consume more, but they also bring challenges like more health problems, particularly dementia and Alzheimer’s, which are costly to treat.
• 😀 The cost of Alzheimer’s and dementia care was $200 billion in 2012, and this figure could rise to $1 trillion by 2050, putting a significant strain on the economy.
• 😀 End-of-life care is a massive cost in the U.S., with $50 billion of Medicare spending in 2012 going to cover care for patients in their final two months of life.
• 😀 Funeral costs in the U.S. can exceed $15,000, with additional costs for burial plots and headstones. The median price of a funeral with viewing and burial was $7,181 in 2014.
• 😀 Social Security provides a minimal $255 death benefit, which is not nearly enough to cover the costs of dying, including healthcare and funeral expenses.
• 😀 Planning ahead—through advance directives, life insurance, and estate planning—can reduce the financial burden of dying, ensuring that family members are not overwhelmed by medical bills or funeral costs.

Q & A

Why is death considered an important topic to discuss in terms of economics?

Death impacts the economy in many ways, from healthcare costs to funeral expenses, inheritance, and the distribution of wealth. Understanding how death affects economic systems helps to make informed decisions about policies and personal finances.

How has life expectancy changed globally and in the U.S. over time?

Life expectancy has increased globally, from 65 years for those born between 1990 and 1995 to 70 years for those born between 2010 and 2015. In the U.S., life expectancy has significantly risen in the last 50 years, with more people dying of natural causes rather than accidents or violence.

How do income levels affect life expectancy in the United States?

Income levels have a significant effect on life expectancy. For example, an upper-income man in the U.S. was expected to live to 89 years, whereas a lower-income man could only expect to live to 76. This disparity results in the rich receiving more government benefits throughout their lifetime.

What are the economic implications of longer lifespans?

Longer lifespans can contribute to economic growth through more years of consumption, but they also lead to increased healthcare costs. Specifically, conditions like Alzheimer’s and dementia result in high medical expenses due to the long-term care required.

How much did Alzheimer's and dementia care cost in 2012, and what is the projected future cost?

In 2012, the cost of care for Alzheimer's and dementia patients was $200 billion. This cost is projected to rise to as much as $1 trillion by 2050 due to the increasing number of affected individuals.

What role does end-of-life care play in healthcare spending in the U.S.?

End-of-life care is a significant factor in healthcare spending in the U.S. For instance, Medicare spent $50 billion in 2012 on care for patients in the final two months of their lives, highlighting the financial burden of dying.

What are the costs associated with funerals in the U.S.?

The median cost of a funeral with viewing and burial in the U.S. was $7,181 in 2014, with cremation and funeral costs slightly lower at $6,078. Burial costs can increase further when factoring in the price of a burial plot or headstone.

What is the 'basic non-declinable service fee' in a funeral, and how much does it cost?

The basic non-declinable service fee is the mandatory fee charged by funeral providers for their services, which costs around $2,000. This covers the professional handling of the deceased's body and basic funeral preparations.

What is the impact of having life insurance and an advance directive when planning for death?

Having life insurance and an advance directive in place ensures that funeral and end-of-life expenses are covered, reducing the financial burden on loved ones. It also ensures that medical care decisions are made according to the individual's wishes.

How can planning ahead help reduce the financial impact of dying?

Planning ahead by having a will, advance directives, and life insurance can significantly reduce the financial burden on families. This includes covering funeral costs and managing debt, as well as ensuring the smooth distribution of assets.