Marginal Costs of Life in Health Care

Age, Gender and Regional Differences in Switzerland

Abstract

An optimal allocation of health care expenditure over the life-cycle at each age sets the value of life equal to the marginal costs of life. This paper estimates the age-specific marginal costs of life using age-specific health care expenditures and mortality rates of Swiss cantons for the period 1997 to 2003. I find substantially higher marginal costs of life for women compared to men, reflecting both a lower marginal productivity of medical inputs and a higher spending for women. Medical technology does not differ across regions while marginal costs of life do.