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To: LLCF who wrote (4997)	6/15/2001 10:32:16 PM
From: KyrosL	Read Replies (1) \| Respond to of 74559

I know all about hedonics and how it affects productivity and inflation. First I think the effect is not very much, maybe around a few tenths of a percent. Second I think that hedonics is a valid concept, although its application to computers may not be correct. For example, you brought up health care. Life expectancy in this country has been steadily marching upwards. The main reason is better health care. At present we do not use hedonics in health care pricing. I think we should. In the last five years the quality of newly introduced drugs has taken a tremendous leap forward. These drugs are in general very expensive and they are one of the main reasons of the hefty increase in health care inflation. But they evidently have improved considerably the quality of life of those that take them, compared to the cheaper, older drugs. How much is this worth? Surgery has also improved tremendously, being much less invasive than in the past. Consequently, both the hospital stays are a lot shorter, and the chance of complications and death smaller. How much is this worth? Only a few years ago an AIDS patient was condemned to a quick painful death. Today he can live a relatively long productive life thanks to drug cocktails that were introduced in the last few years. How much is this worth? Kyros

To: LLCF who wrote (4997)	6/16/2001 11:54:46 AM
From: Ilaine	Read Replies (1) \| Respond to of 74559

Health care is now 15% of GDP. I recently was quite surprised to find out that bone marrow transplants cost $100K to $500K - in addition to the surgery, there is lengthy hospitalization due to immunosuppression. Still, what is the value of saving a life? Depends on whether the person is a productive member of society, of course - and the cost of care while the person dies isn't cheap, either. I was listening to Michael Milken on the radio last week - he is doing a lot of charity work for cancer research - his estimate, based on research done at the University of Chicago, of the economic value in the US alone of eliminating deaths by cancer is $46.5 trillion. mikemilken.com