Finding a cure for cancer would be worth about $50 trillion, according to the study presented today (Tuesday, April 4) at the annual conference of the American Association for Cancer Research in Washington, DC.
Social value of improved health and longevity is the amount in dollars that additional life years or other health improvements are worth to people, the report said. The value of improved longevity is based on what individuals gain from the enjoyment of consumption and time during an additional year of life, rather than how much they earn.
"Since the benefits of cancer research are large, substantially greater research expenditures would be worthwhile," Murphy and Topel wrote. "A war on cancer that would spend an additional $100 billion on research and treatment may be worthwhile even if it had a one-in-five chance of reducing mortality by just one percent," they said.
During the 20th century, average life expectancy of Americans increased by 30 years, due in large part to medical advances against major diseases, according to the new study by Murphy and Topel titled "The Value of Health and Longevity," to be published in the Journal of Political Economy.
The authors estimate that this increase in life expectancy is worth more than $1.2 million for each American alive today.
From 1970 to 2000, gains in life expectancy added about $3.2 trillion per year to national wealth, the study found.
Increased spending on medical research and cost containment are complementary goals, the report said. "If there is effective cost-containment via cost-effective research spending, then the value of research rises dramatically."
"Ideally, enhanced research funding would be combined with a delivery system that keeps an eye of cost effectiveness," Murphy and Topel wrote.
"The lesson of the last 50 years is the need to address the issue of medical research that will continue to extend longevity without breaking the bank," they said. "A system that better prices medical care may involve people paying a larger percentage of the cost of their own treatment, or enhanced insurance arrangements that allow us to have more effective cost containment."
Murphy is the George J. Stigler Distinguished Service Professor of Economics at the University of Chicago Graduate School of Business. Topel is the Isidore Brown and Gladys J. Brown Professor in Urban and Labor Economics at the University of Chicago Graduate School of Business.