I've got how long? Life expectancy hits new high

Life expectancy has hit a new high, with typical newborn girls now expected to live to 84.5 and boys to 80.4, up from 83.3 and 78.5 a decade ago.

New life tables from the Bureau of Statistics show a typical 30-year-old woman can expect another 55 years, with a further 36 years for a 50-year-old, 18 for a 70-year-old, and 2.4 for a typical 100-year-old.

For men, a typical 30-year-old will get another 51 years, with 32 years for a 50-year-old, 15.6 for a 70-year-old, and 2.2 for a typical 100-year-old.

Men at the traditional retirement age of 65 have another 19.5 years. Fifty years ago in 1966, they had only 12 years. Women at 65 have another 22.3 years. Fifty years ago they had 15.7.

The Australian Capital Territory has the highest life expectancy of 85.3 for newborn girls and 81.2 for boys, followed by Victoria at 84.7 and 81.1. The Northern Territory has the lowest, of 78.5 for girls and 75.7 for boys. Tasmania is the second lowest at 82.8 and 78.9. 

Indigenous life expectancies at birth are 9.5 years lower for girls and  10.6 years lower for boys.

But the reality is less grim. Academic demographers believe the ABS figures are almost certainly underestimates.

Peter McDonald, of the University of Melbourne, says they assume no improvements over the course of a life.

"They are not any individual's lifetime; they are just telling you the expectation of life you would get if life expectancy didn't change," he said. "And for the last 200 years it has been going up."

The ABS itself says the figures it quotes for life expectancies at birth are the average number of years that a group of newborn babies would be expected to live "if current death rates remain unchanged".

Professor McDonald said a rule of thumb was that improvements over an 85 or 81 year life would add anther four  years. That means a typical newborn girl might live to 88 and a typical boy to 85, unless improvements stop or accelerate.

In The Age and Sydney Morning Herald

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Does the share market stop us giving?

Radio National will ask me that question at 3.00 pm today as part of its East Africa appeal

The answer seems to be no.

In the US, giving to charities rises with the share market but...

John List is the man. There's nothing much about giving he doesn't know.


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Tragic acounting - the moral vacuum at the heart of modern economics

This is what I wrote after the 2004 Boxing Day tsunami

It didn't take long after perhaps the greatest natural disaster of modern times for an economist to say what would otherwise be unthinkable.

Fred Bergsten runs the Institute for International Economics in Washington. He is a former assistant secretary of the US Treasury. Three days after the tsunami hit, with at that time tens of thousands confirmed dead, he told US National Public Radio (NPR) that the tragedy might be a good thing for the economies concerned.

He said: "Like any disaster, you get negative effects through destroying existing properties and people's health, but you do get a burst of new economic activity to replace them, and, on balance, that generally turns out to be quite positive."

What on earth could he have meant? How could the loss of so many lives so suddenly, with so many more to come, be "on balance, positive"?

It is one of the mysteries that first got me interested in economics and economists. I remember hearing at school that it would have been a good thing for Britain, economically, if it had lost World War II and had its buildings and factories destroyed.

Bergsten agrees. He told NPR that after Japan and Germany were flattened in 1945 they experienced economic booms that lasted for the next 20 to 30 years. He said that happened partly as the result of reconstruction spending but mainly because their old factories were replaced with state-of-the-art ones.

Applying that lesson to the devastation wrought on the Thai island of Phuket he says: "When they put up new resort hotels, they'll be more modern, they'll be more attractive. They'll probably bring in more people in the future."...

Bergsten isn't alone in his distasteful optimism. Britain's Standard Chartered Bank has told its clients it expects the impact of the tragedy to be "V-shaped". It says that was the pattern with the SARS epidemic, the Bali bombing and Japan's Kobe earthquake: a large dip in economic activity followed by increased aid and government spending, then an economic recovery a year or so later.

It says it expects the same sort of pattern in most of the countries affected by the tsunami, although it acknowledges that the present disaster is far greater and more widespread than the earlier ones.

(The bank says the exceptions to its optimistic outlook are Sri Lanka and the Maldives. Each faces severe difficulties, being in bad financial shape before the tsunami and relying on tourism for most of its foreign income. The Maldives collects more than 90 per cent of its tax revenue from tourism-related taxes and import duties.)

Such analyses only make sense if you don't pay attention to the lives that are being lost. They would sound ludicrous to someone whose family had been swept away.

The models of Bergsten, Standard Chartered and their ilk value the production that has been lost with those lives (tourism services, factory output and so on) and look forward to its return. But they don't value the lives themselves. Most of us value human lives above what they can produce.

When one of our parents or children is at risk of dying we find ourselves prepared to pay almost anything to stop that from happening, regardless of their productive capacity.

I say "almost anything" because a relatively new branch of economics believes it has found an upper limit to what we are prepared to pay to save a human life. The most widely quoted American limit is $US6.1 million ($7.83 million), known as "Viscusi's number" after the Harvard University economist Kip Viscusi.

In more than 60 studies Viscusi and his colleagues have tried to determine the monetary value we place on human life by examining our behaviour. If, for example, I demand an extra $610 a year to move from a job which I know is completely safe to a job in which I know there is a one in 10,000 annual risk of dying, they conclude that I value my life at $US6.1 million. They apply the same sort of calculations to decisions about my purchases, such as how much extra I am prepared to pay to buy a car with extra safety features.

The range of values resulting from the studies is wide, from as low as $US900,000 a life to more than $US27 million per life. But the average, $US6.1 million, has acquired an almost mystical status in the US. It has come to be regarded as the statistical value of human life. In 2000 the US Environmental Protection Agency used it to set the permissible level of arsenic in drinking water. Had the Viscusi number been higher than $US6.1 million, the agency would have imposed a less lenient standard.

There are many reasons for believing the number should be higher. One is that most of the workplace studies conducted by Viscusi and his associates exclude women. Recent studies suggest that women typically value safety about five times as highly as do men.

Another is that most of studies conducted in the US examine the value of life only to the person whose life is at risk. But other people value that life as well. In my own case they include my daughters, my son, my father, my wife. If I died tomorrow my own loss would only be the beginning.

The loss resulting from the tsunami is far more than the missing production and infrastructure. And it is far more than one Viscusi number for each of the 150,000 or so people believed to be dead. The entire planet appears to be grieving. We all seem to have lost something.

The economics profession is struggling to find the language to talk sensibly about what has happened.

That it can't yet do it says as much about that profession as it does about the scale of the tragedy.

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Sunday dollars+sense: speed versus life

Drivers beware, cyclists breathe easier. The ACT is getting more speed cameras. Yes, I know it will slow drivers down. It'll probably take you slightly longer to get where you are going. On the other hand, cyclists like me are more likely to live.

How do you weigh the cost of the change (extra travelling time for some) against the benefits (fewer people such as myself killed or injured)?

NSW and Victoria do it differently.

NSW is intentionally lax in its enforcement of speed rules. It is thought to allow a margin of 10 per cent over the speed limit before issuing a fine. Victoria is strict. As little as 3 km/h over the speed limit and you're gone.

The free-and-easy approach of NSW appears to come with a cost... We can't be sure that road rules are the reason, but it has a higher rate of road deaths than Victoria. It gets a benefit of saved travelling time but at a cost: extra lives lost.

Using the hourly wage rate it ought to be possible to put a dollar value on the benefit it gets from each life lost, in other words to work out the value that NSW places on human life.

As far as I know, no-one has done the calculation. But it has been done in the United States, in circumstances that were more clearcut. As a fuel- saving measure during the energy crisis of 1974, the Nixon administration imposed a low nationwide speed limit of just 55 miles an hour (88km/h). Road deaths plummeted.

After 1987, each state again became free to lift the limit on its rural interstate roads. Most boosted their limit to 65mph (104km/h). But seven left it unchanged at 55mph (88km/h).

Princeton economist Orley Ashenfelter and Chicago economist Michael Greenstone examined what happened in the states that boosted the limit. Their findings are chilling.

First, the actual increase in speed in the states that boosted the limit was low, averaging just 2mph (3km/h) on the roads affected. That's because a lot of the drivers on those roads were already speeding.

Second, that small increase in speed pushed up deaths by an astounding 36 per cent.

The states that boosted the limit appeared to have valued each life it destroyed at around $2million. I think I am worth more than that. I want more cameras.


Orley Ashenfelter and Michael Greenstone, Using Mandated Speed Limits to Measure the Value of a Statistical Life. Princeton University, Department of Economics, Working Paper number 463, April 2002.

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Dismal failure to count the true cost

The tsunami can only be seen in a positive light by ignoring human values, writes Peter Martin.

It didn't take long after perhaps the greatest natural disaster of modern times for an economist to say what would otherwise be unthinkable.

Fred Bergsten runs the Institute for International Economics in Washington. He is a former assistant secretary of the US Treasury. Three days after the tsunami hit, with at that time tens of thousands confirmed dead, he told US National Public Radio (NPR) that the tragedy might be a good thing for the economies concerned.

He said: "Like any disaster, you get negative effects through destroying existing properties and people's health, but you do get a burst of new economic activity to replace them, and, on balance, that generally turns out to be quite positive."

What on earth could he have meant? How could the loss of so many lives so suddenly, with so many more to come, be "on balance, positive"?...

It is one of the mysteries that first got me interested in economics and economists. I remember hearing at school that it would have been a good thing for Britain, economically, if it had lost World War II and had its buildings and factories destroyed.

Bergsten agrees. He told NPR that after Japan and Germany were flattened in 1945 they experienced economic booms that lasted for the next 20 to 30 years. He said that happened partly as the result of reconstruction spending but mainly because their old factories were replaced with state-of-the-art ones.

Applying that lesson to the devastation wrought on the Thai island of Phuket he says: "When they put up new resort hotels, they'll be more modern, they'll be more attractive. They'll probably bring in more people in the future."

Bergsten isn't alone in his distasteful optimism. Britain's Standard Chartered Bank has told its clients it expects the impact of the tragedy to be "V-shaped". It says that was the pattern with the SARS epidemic, the Bali bombing and Japan's Kobe earthquake: a large dip in economic activity followed by increased aid and government spending, then an economic recovery a year or so later.

It says it expects the same sort of pattern in most of the countries affected by the tsunami, although it acknowledges that the present disaster is far greater and more widespread than the earlier ones. (The bank says the exceptions to its optimistic outlook are Sri Lanka and the Maldives. Each faces severe difficulties, being in bad financial shape before the tsunami and relying on tourism for most of its foreign income. The Maldives collects more than 90 per cent of its tax revenue from tourism-related taxes and import duties.)

Such analyses only make sense if you don't pay attention to the lives that are being lost. They would sound ludicrous to someone whose family had been swept away.

The models of Bergsten, Standard Chartered and their ilk value the production that has been lost with those lives (tourism services, factory output and so on) and look forward to its return. But they don't value the lives themselves. Most of us value human lives above what they can produce.

When one of our parents or children is at risk of dying we find ourselves prepared to pay almost anything to stop that from happening, regardless of their productive capacity.

I say "almost anything" because a relatively new branch of economics believes it has found an upper limit to what we are prepared to pay to save a human life. The most widely quoted American limit is $US6.1 million ($7.83 million), known as "Viscusi's number" after the Harvard University economist Kip Viscusi.

In more than 60 studies Viscusi and his colleagues have tried to determine the monetary value we place on human life by examining our behaviour. If, for example, I demand an extra $610 a year to move from a job which I know is completely safe to a job in which I know there is a one in 10,000 annual risk of dying, they conclude that I value my life at $US6.1 million. They apply the same sort of calculations to decisions about my purchases, such as how much extra I am prepared to pay to buy a car with extra safety features.

The range of values resulting from the studies is wide, from as low as $US900,000 a life to more than $US27 million per life. But the average, $US6.1 million, has acquired an almost mystical status in the US. It has come to be regarded as the statistical value of human life. In 2000 the US Environmental Protection Agency used it to set the permissible level of arsenic in drinking water. Had the Viscusi number been higher than $US6.1 million, the agency would have imposed a less lenient standard.

There are many reasons for believing the number should be higher. One is that most of the workplace studies conducted by Viscusi and his associates exclude women. Recent studies suggest that women typically value safety about five times as highly as do men.

Another is that most of studies conducted in the US examine the value of life only to the person whose life is at risk. But other people value that life as well. In my own case they include my daughters, my son, my father, my wife. If I died tomorrow my own loss would only be the beginning.

The loss resulting from the tsunami is far more than the missing production and infrastructure. And it is far more than one Viscusi number for each of the 150,000 or so people believed to be dead. The entire planet appears to be grieving. We all seem to have lost something.

The economics profession is struggling to find the language to talk sensibly about what has happened.

That it can't yet do it says as much about that profession as it does about the scale of the tragedy.

Read more >>

Life's cheaper in the faster state

This year's holiday road toll was the worst in eight years. But it's not because we drive badly. When asked, more than three-quarters of us say our driving is better than average.

It is true NSW recorded more deaths than Victoria over Christmas (25 compared with 17), but that needn't mean we are bad drivers, either. In the reassuring words of the pro-free market Centre for Independent Studies: "Victoria has always enjoyed slightly safer roads per kilometre travelled compared with NSW."

Most of us are very easily reassured that the deaths on our roads are not our fault. Six out of 10 of us admit to speeding (which is presumably OK because we are better than average drivers); six out of 10 of us oppose attempts to make the road rules tougher.

Late last year the CIS offered encouragement to speeders. On the front page of its magazine it asked: "Speed Traps: Saving Lives or Raising Revenue?" Inside it argued that speed had little to do with road deaths and that those of us who speed moderately "tend to be the safest drivers".

Since then the CIS appears to have softened its stand. The latest edition of its magazine devotes equal space to both sides of the debate.

So in that spirit I would like to take a look at what is actually happening in Victoria and whether it has any lessons for us here in NSW...

It is beyond doubt that there are far fewer road deaths south of the Murray: 334 last year compared with 553 in NSW. Victoria's population is lower, but not low enough to account for the difference.

It is also beyond doubt that Victoria enforces its speed rules more rigidly. In that state you will be booked if you are caught driving just 3kmh over the speed limit. In NSW we expect to be allowed to drive up to 10 per cent over the limit.

And in Victoria the speed cameras are hidden. Nineteen per cent of Victorian drivers say they have been booked in the last two years. In NSW the proportion is only 12 per cent. (The tough approach has become a political issue in Victoria. The Opposition has promised to reset the cameras to catch fewer speeders.)

The CIS is right to say that these facts do not necessarily mean that Victoria's approach has brought about the lower rate of deaths. There could be something else at work. To conclusively determine whether getting tough on speed saves lives you would need to run a controlled experiment in perhaps as many as 50 states which were free to vary their road rules over a period of years.

Fortunately the United States has conducted just such an experiment.

During the energy crisis of 1974 the Carter administration succeeded in enforcing a low nationwide US speed limit of just 55 miles per hour (88kmh). Road deaths slid 15 per cent.

From 1987 each state again became free to choose to lift the limit on its rural interstate roads. Within a year most states had lifted their limit to 65mph. But seven left the limit unchanged.

In a paper soon to be published in the Journal of Political Economy, the economists Orley Ashenfelter from Princeton University and Michael Greenstone from the University of Chicago examine what happened in those states that lifted their limits. Their findings are surprising.

First, the actual increase in speed in those states was quite low, an average of only 2mph (3.2kmh) on the roads affected. The professors say that is because a lot of drivers on those roads were already speeding.

Second, the small increase appears to have pushed up deaths per mile on those roads by an astounding 36 per cent.

So the professors asked a question only economists would ask: what benefit had the drivers in those states gained in exchange for each of the extra deaths?

The answer was reduced travel time - about 125,000 hours were saved for each extra life lost, which valued at the average wage rate, worked out at a benefit to drivers of about $US1.5 million ($1.9 million) per life lost.

Did the states that pushed up their speed limits value life too cheaply?

Perhaps not. That value of $US1.5 million per life is curiously close to the average $US1.8 million per life which is to be paid out in compensation to families of victims of the September 11 terrorist attacks.

Those US states that chose not to lift their speed limits valued lives more highly.

If speeding rules are indeed linked to deaths in the way that the US data suggests, then right now Victoria is valuing human life more highly than is NSW.

Those of us who enjoy the more relaxed approach to speeding law enforcement in this state are perhaps fortunate that no one has done the calculation for Australia.

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