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"We distinguish two types of health improvements -- those that extend life and those that raise the quality of life," explain the authors. "As the population grows, as incomes grow, and as the baby-boom generation approaches the primary ages of disease-related death, the social value of improvements in health will continue to rise."

Many critiques of rising medical expenditures focus on life-extending procedures for persons near death. By breaking down net gains by age and gender, Murphy and Topel show that the value of increased longevity far exceeds rising medical expenditures overall. Gains in life expectancy over the last century were worth about $1.2 million per person to the current population, with the largest gains at birth and young age.

"An analysis of the value of health improvements is a first step toward evaluating the social returns to medical research and health-augmenting innovations," write the authors. "Improvements in life expectancy raise willingness to pay for further health improvements by increasing the value of remaining life."

Murphy and Topel also chart individual values resulting from the permanent reduction in mortality in several major diseases -- including heart disease, cancer, and diabetes. Overall, reductions in mortality from 1970 to 2000 had an economic value to the U.S. population of $3.2 trillion per year.

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Kevin M. Murphy and Robert H. Topel. "The Value of Health and Longevity" Journal of Political Economy.