The Determinants of Life Expectancy: An Analysis of the OECD Health Data

Abstract

This study considers an aggregate life expectancy production function for a sample of developed countries. We find that pharmaceutical consumption has a positive effect on life expectancy at middle and advanced ages but is sensitive to the age distribution of a given country. Thus, ignoring age distribution in a regression of life expectancy on pharmaceutical consumption creates an omitted variable bias in the pharmaceutical coefficient. We find that doubling annual pharmaceutical expenditures adds about one year of life expectancy for males at age 40 and slightly less than a year of life expectancy for females at age 65. We also present results for lifestyle inputs into the production of life expectancy. For example, decreasing tobacco consumption by about two cigarettes per day or increasing fruit and vegetable consumption by 30% (one-third pound per day) increases life expectancy approximately one year for 40-year-old females. JEL Classification: 112 example, Gradstein and Kaganovich (2004) conclude that increasing longevity results in increasing public funding of education and economic growth. Cremer, Lozachmeur, and Pestieau (2004, p. 2260) argue that early retirement "puts pressure on the financing of healthcare and pension schemes [and this pressure] is made worse by growing longevity." While typically assumed strictly exogenous for the purpose of policy analysis, it has been argued that life expectancy (or more broadly "health") is predetermined by behavioral and policy variables in what can be loosely described as a production function for health. Estimating this function is the goal of this study. Auster, Leveson, and Sarachek (1969) were the first economists to study a population production function for health: a regression of state-level mortality rates on medical care and environmental variables. Today their research motivations and questions remain compelling. Indeed, given the size 768

Is there an association between economic performance and public satisfaction in health care?

“…(3) Tobacco use as a lifestyle indicator, measured as the percentage of daily smokers among the adult population. Earlier research has shown that decreasing or abstaining from tobacco consumption increases life expectancy significantly [8,27]. Other lifestyle variables, for example alcohol consumption, were found not to be statistically significant with respect to health output [8].…”

An Association of Total Health Expenditure with GDP and Life Expectancy

“…From the literature point of view of the Organisation for Economic Co-operation and Development (OECD) countries, the health expenditure per capita on GDP consistently showed that income elasticity ranged between 1.20 and 1.50 [15]. Several studies conducted in OECD countries used the panel data and found that income elasticity is larger if it is more than 1.00 for a country [16].…”

Determinants of Life Expectancy in Eastern Mediterranean Region: A Health Production Function

“…Shortage of food and excess intake both contribute to several health problems (38). Food has been considered in some studies as an input of health production function (3,26,30). Health expenditure, as representative of resources allocated to health care, shows the access of people to health care production facilities.…”

“…Health expenditure, as representative of resources allocated to health care, shows the access of people to health care production facilities. In many studies (3,26,28,(30)(31)(32)37,39) it has been considered for explaining the health status of the society. Urbanisation is another determinant of health (3,28,30,32) which can have both positive (increasing access to medical centres and information) and negative (pollution) impacts on the overall health (24).…”