Your End of Days: Would Life-Length Testing Save the Government Money?

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A Spanish company announced this summer that it can help determine when people will die by using a blood sample, a $700 test, and research that earned three American geneticists the Nobel Prize in medicine in 2009. Though the test has its critics, and though it won’t offer an exact date for one’s death, it does promise to reduce uncertainty about longevity by examining a tiny part of DNA that reveals biological age as opposed to chronological age. Successive generations of the test are likely to improve in predictive power.

Our ignorance about an individual’s longevity is the source of a number of problems. Many of them are personal, but some have implications for society writ large, and taxpayers in particular. So one wonders: if the government can make you confront the calorie content of your diet, can it also make you confront your mortality?

If the government were to mandate “life length” testing, it could help resolve the intractable lifetime savings problem. Pervasive under-saving among households is a result of our impatience, to be sure, but it is certainly also a consequence of the fact that no one knows how long his savings need to last. Save too much and you miss out on having fun when you’re alive. Save too little and you end up broke and reliant on the social safety net that taxpayers fund.

Under-saving burdens society much like obesity among the uninsured. And ignorance about how long we will live can only cause a drain on the Treasury. If you over-save by dying unexpectedly early, then you pass your remaining wealth on to heirs; the government doesn’t see it—except for a portion, if any, paid in inheritance taxes. But die unexpectedly late and you end up on the public dole, with your extra years of life paid for by taxpayers. Thus, from the uncertainty of longevity, the government faces only downside risk. There is no upside.

Resolving uncertainty about longevity would not just be in the interest of society, it would also be in the interest of strictly rational individuals, who, armed with the knowledge of when they will die, could make optimal savings decisions and check off all the items on their bucket lists. And yet, a great many of us would choose not to undergo the testing even if it were free. We simply don’t want to know when we will die.

And in many other situations, we delay resolving uncertainty even though rationality dictates that we should try to resolve it as soon as possible. Have you ever received a letter or an email and waited to open it? Maybe it was from a college admissions office or the editor of a journal to which you had submitted a paper. Did you tell the doctor you didn’t want to know the gender of your child until she was born? Or did you delay opening your medical test results, even just for a minute?

The thought of government forcing people to resolve uncertainty about their deaths probably (definitely?) seems Orwellian to most. But the same economic arguments that support mandatory consumption of calorie information—advanced by a sufficient number of Freakonomics readers to make my essay last week among the most “popular” on the blog—also support mandatory consumption of “death information”: forcing you to confront your mortality leads to better life decisions and saves the government money.

Such is the flavor of the new libertarian paternalism, a concept Richard Thaler and Cass Sunstein introduced to the masses in describing the manager of a cafeteria who must decide on the order of food presentation in the food line. Do fruits and vegetables come before cookies and cake? The manager, a “choice architect,” must make some decisions—the food must go in some order. And so it seems sensible to put the fruit and vegetables first if that will increase their consumption relative to deserts. No one would object to this policy because the cost of consuming the desserts is virtually unchanged—it just goes onto your food tray after the healthy stuff. It makes no one worse off and may make some people better off if they value healthy eating and if a salad crowds out a cookie.

But mandatory information consumption policies, like calorie labeling laws and compulsory life-length testing, substitute a choice architect’s judgment for that of the individual in order to “nudge” the individual into a choice that the architect deems best for him or society, and yet is rejected by the individual when he is given a choice. As Thaler and Sunstein write in the American Economic Review (ungated version here), libertarian paternalism is intended as a policy approach that “preserves freedom of choice.” Except, apparently, when that choice is blissful ignorance.

 

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  1. Nosybear says:

    There seems to be a simpler way to eliminate over-saving: Outlaw inheritance. No? Would that not be the greatest incentive to avoiding over-saving? Think of the advantages: You also ensure that successive generations must be productive and not live off the “dole” provided by their elders, eliminating the genetic lottery! Rather than life-testing, mandate “you can’t take it with you” legally and use the proceeds to support those who under-saved.

    Sir, I suggest you need to get over yourself and just ignore the calorie counts.

    Hot debate. What do you think? Thumb up 21 Thumb down 22
    • Min says:

      Obviously that would be a good way to get our society closer to a meritocracy, but Americans (and people in general) are too tied to the idea that their progeny are entitled to what their parents have earned.

      Hot debate. What do you think? Thumb up 16 Thumb down 14
      • Dan says:

        Min: You seem to be tied to the idea that you are entitled to what others’ parents have earned.

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    • Ian M says:

      Well, that would certainly stimulate the economy. I wouldn’t leave one red cent to the government.

      The idea is flawed though. How could we prevent parents from simply giving (or more likely, entrusting) money to their children while they are still alive?

      Ask Ron Paul if he will adopt that idea in his platform.

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    • Psychohistorian says:

      A good idea in theory; an impossible one in practice. You’d need to vastly, vastly restrict the use of private money and create a powerful, intrusive, and aggressive enforcement bureau for this to even come close to working. For example, I could get another rich friend, have his kid paint a picture, then by it for a few million. He does the same thing for my kid. If we orchestrate it right we could probably even get our kids to only pay the capital gains tax on it. How do you stop this? And I thought of that in 2 minutes. How do you stop it when people are paying lawyers $800 an hour to figure out how to get away with it?

      A 100% inheritance tax wouldn’t hit the super-rich that hard because they’d be willing to spend anything less than a hundred cents on the dollar to avoid it, and that may dollars will buy you a lot of avoidance.

      Incidentally, even you could magically keep it from the kids, a lot of it would be basically wasted. There would be an enormous incentive to give money away to various high-status charities, like universities and the arts. Colleges would have some very nice football stadiums named after rich people, but it’s unclear this would be better for society than giving it to the kids and letting them spend/invest it.

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    • Jon says:

      This would immediately create a massive incentive for the poor to begin indiscriminately murdering the rich.

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    • Riok says:

      I really don’t think over-saving is a significant problem.

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    • steve says:

      Eliminating inheritance solves nothing. It would simply result in the parents spending all the money on their kids before they die, and then being supported by the kids in their old age.

      Don’t think it would happen, think again. For one example, who carries the loans these days for college education. Mostly the kids. The parents would do so instead under no inheritance.

      Are you gonna write laws regulating that too? Fine. Now imagine a small business. Imagine the parents hire their kid. How much does he get paid?

      Under no inheritance laws. I expect that the average person who obtained any real wealth in their lives would die in debt having made what would appear to be a number of poor business decisions.

      Thumb up 4 Thumb down 0
    • pawnman says:

      Of course, if I can’t pass on what I earn to my heirs, I’m going to spend it all…thus not only undersaving, but not saving at all. Why do I care about saving if my kids and family won’t see it anyway?

      I will also point out that kids are not the only heirs. My dad died of cancer about 5 years ago. Mom was a housewife for 25 years. Where do you think she got the money to stay in her house?

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    • Speaking about inheritance? says:

      That is the problem with certain people who grind their teeth in their sleep.

      Thumb up 0 Thumb down 0
  2. Paul Clapham says:

    The fact that I have to know how long my savings need to last is indeed a problem. In a well-run system I would be able to put my money into a fund along with thousands or millions of other people’s money. The fund managers would then use well-known actuarial statistics about how long those people would be expected to live, and dole out the money accordingly. Business as usual for actuaries.

    But no. Every one of those thousands or millions of people are forced to make their own guesses as to how long they might live and how much they should save. Notice that it’s not the government forcing us to do that, it’s private enterprise forcing us to do it by failing to provide a system which does it for us. It’s better for them because then they can sell us “financial adviser” services. Not necessarily better for us.

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    • Paul says:

      Using actuarial tables will ensure that the fund managers will get it right…. on average. What about the millions of statistical outliers, who outlive their expected lives? There would still be a large number of elderly people living on the government dole.

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  3. James says:

    I would love to have this information. Everyone dies and I recognize that day will come for me as well.

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  4. Alex says:

    It seems like the how is just as important as the when. Say there are two people, with the test saying one will live until 80 and the other 85. Based on the test, the first person would decide to save less since he’ll die sooner. But what if he dies after a 10-year battle with cancer while the other person dies at 85 after a sudden heart-attack following an otherwise healthy life? The first person should obviously save more for the hospital bills whereas the 85 year old could spend more across those extra 5 years, knowing that he can still travel until the end. Maybe the test would be useful for older people who have more of an idea of their future health, but it seems like things would still be too hazy to help younger or even middle-aged healthy people.

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  5. JohnS says:

    See, unlike your last essay, this is exactly what I expect from Freakonomics. Short interesting nuggets of interesting economical research or goings-on from around the world, together with a thoughtful yet accessible discussion on the consequences and some links for further reading. No personal opinions or attempts to start a revolution.

    Of course, in this case, the government isn’t just giving out information – it’s making a prediction. Regular Freakonomics readers should already be wary about trusting those too much. It’s not quite the same thing as giving out hard calorie data.

    Also, this endeavour might have more unintended consequences than handing out calorie data – it seems quite drastic for just helping people save more efficiently.

    The next step is of course to invent a death machine, which can predict your cause of death – Personally I can’t wait: http://machineofdeath.net/

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  6. Clancy says:

    I disagree with the assertion that the government sees no upside if you die early. If you die before your actuarial life span, the government has collected more from you Social Security and Medicare taxes than it pays out. If you live longer you get more than you paid in. (I know it doesn’t really work like that because the money for current retirees come from current workers, but my point still stands)
    Since neither SS or Medicare is means-tested, everyone gets the payout; whether your private savings, pensions, 401ks, are adequate is irrelevant.

    I think the scarier issue is not whether or not gov’t mandates life-span tests, but whether the results are kept secret and what they can be used for. It might help your retirement planning (maybe), but the possibilities for discrimination based on life span are endless.

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  7. James says:

    Perhaps we should first ask whether this test actually works, or whether it’s merely a way to ensure its developers a comfortable retirement?

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  8. Eric M. Jones. says:

    Interesting idea. In a few years the test will be $20. A few years later your telomeres will grow longer when you take a yearly injection.

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