The Death Tax

The Death Tax
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The Death Tax The Economics of Death: Crash Course Econ #30

Published on Apr 16, 2016

We need to have a talk about your future. You’re going to die. We all are. And it’s probably going to be expensive. This week on CC Econ, Adriene is talking about the economics of death. Some of the expense is tied to the cost of end-of-life health care, but funerals are a big business, too.

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Death Tax

0:00hi I’m Adrian help this is crash course economics and today we need to have a
0:04little talk about a subject that most people try to avoid death we’re all
0:08going to die now I know from our demographic analytics that most of you
0:12are young and your statistically likely to live quite a bit longer but it’s
0:17still gonna happen someday and how and when we die has some significant
0:21economic impacts so let’s listen to the crash course on watch the credits have a
0:26school existential crisis and then we’ll get down to the economics of death
0:37let me start by pointing out that my co-host Jacob isn’t anything Canada
0:44where he’s writing a textbook and making me cum videos for his YouTube channel
0:47ac/dc leadership and probably still wearing ECDC belt buckles everyday now a
0:54couple of disclaimers one this is not crash course philosophy we’re not gonna
0:58get into the moral issues surrounding death we don’t know what happens to you
1:02after you die
1:03although we will talk a little about what happens to your money after you die
1:06too we’re going to focus on how death and dying impact the economy of the
1:10united states and it’s not because we’re American exceptionalism or something
1:14it’s because we read and write in English and information on the USS is
1:18readily available to us we know that attitudes and practices around death
1:21differ throughout the world but most of our conversation is going to focus on
1:25death in America and is not death to America we focused on that and world
1:30alright a little bit news on the whole throughout the world life expectancy at
1:34birth has been increasing according to the United Nations the global average
1:38life expectancy has risen from 65 years for people born between 1990 and 1995 to
1:45seventy years for those born between 2010 and 2015 but there are still some
1:50pretty big disparities people born in Africa have a life expectancy at birth
1:54that’s twelve years less than the global average and twenty-one years the number
2:00for those who live in North America so that’s not great in the United States
2:04life expectancy has changed dramatically in the last 50 years americans live
2:09longer than they used to and more and more of them died of natural causes
2:12accidents and murder and violent death in general are way down people are
2:18living longer the Pew Research Foundation reports that by 2010 in the
2:22United States 31 percent of deaths were among those aged 85 and older
2:27this was a huge change from 1968 when twelve and a half percent of people who
2:32died were in that age range it’s not all roses though I mean this is still an
2:36episode about dying when we look at this data by income level the numbers look a
2:41little different
2:42a recent study found that income levels affect life expectancy a lot in 2010
2:48and upper-income men in the USA was expected to live to age 89 the same
2:53lower-income man with live 276 and the shorten lifespan has a big economic
2:59impact in effect the rich receive a lot more government benefits over the course
3:04of their lives that 89 year old upper-income men would collect an
3:08average of five hundred twenty-two thousand dollars in government benefits
3:12during his life while the lower income would only collect an average of 300
3:16$91,000 so how do are on average longer lives affect the economy well economic
3:23thought about this stuff berries some economist argue that increase lifespans
3:27are in a very basic sense good for the economy where people live longer they
3:32have more years to consume stuff contributing to economic growth on the
3:35other hand long life tends to come with more health problems and memory related
3:39illnesses have become much more prevalent in 1968 the Centers for
3:44Disease Control and Prevention documented 293 dust from dementia
3:49senility and Alzheimer’s in 2010 those illnesses accounted for more than a
3:54hundred eighty thousand deaths the CDC also reports five million Americans
3:59suffer from Alzheimer’s and dementia in 2013 and that number was projected to
4:03rise as high as 13 point eight million by 2050 people with Alzheimer’s can live
4:09for a long time with the disease and they need a lot of care which is
4:14the cost of caring for patients with Alzheimer’s and dementia was two hundred
4:17billion dollars in 2012 and those costs could rise as high as a trillion dollars
4:23by 2015 that’s a lot of money as you’ll recall from our economics of health care
4:28episode the USR he has the highest per capita health care spending in the world
4:33and end of life care accounts for a huge part of that spending in 2012 fifty
4:39billion dollars of medicare spending covered care for patients during the
4:43last two months of their lives and that doesn’t account for the cost that
4:47families absorbed caring for dying family members at home
4:50medicare doesn’t cover all the costs of health care and direct care from family
4:54members often results in lost wages it’s also worth asking exactly what we’re
5:00buying with all this money
5:02decay that the vast majority of people would prefer to die at home but more
5:06than seventy percent of Americans died in nursing homes or hospitals patients
5:10often end up receiving a tremendous amount of care at the end of their lives
5:15the question we need to ask ourselves is whether that intense and expensive level
5:19of care improves life or simply prolong suffering the answers to those questions
5:24tend to be mixed and here we stray into the thorny territory of medical ethics
5:29studies indicate that many doctors and patients are uncomfortable with the idea
5:34of having cost of care
5:36factored into end of life decisions no one wants to be denied a course of
5:40treatment based on budget concerns one widely agreeable option for cutting
5:44costs and end of life care has grown out of a movement meant to improve the
5:48quality of people’s in the life experience hospice and palliative care
5:53treat patients symptoms and manage their pain as they die rather than performing
5:58more and more procedures in an attempt to prolong life in 1982 the United
6:03States passed a law that allowed medicare cover hospice benefits for
6:07patients with terminal illnesses while studies indicate that expanded access to
6:11Hospice and Palliative Care do work to lower into life costs they’re by no
6:16means a single solution to rising expenditures for now though let’s put
6:21aside the complex mysteries of american health care costs and agree that dying
6:25is expensive and we haven’t even started counting what it costs to actually be
6:29dead once we get beyond the costs associated with dying we’re still left
6:33with a cost of disposing of our bodies let’s talk about what happens to you
6:37when you died and how much it costs and the thought but according to the
6:42National Funeral Directors Association the median price for a funeral with
6:45viewing and burial in the United States with 7181 dollars in 2014 the median
6:53price of a cremation
6:54and funeral was 6078 dollars and while the two seemed comfortable the cost of
7:00burial are quite a bit higher as that 7181 dollars doesn’t include a burial
7:06plot or headstone at seven thousand $181 does include a bunch of stuff though
7:12your funeral starts with something called the basic non decline double
7:16service fee which one you about $2,000 that means for a funeral professional to
7:21even look at your body it’s gonna be two grand and if you want any sort of fuel
7:26you’ll need to pay up the rest of the cost of a funeral or decline Apple but
7:30if you want a public funeral you’re probably going to want to pay them less
7:33added up the median price of transporting a body from the hospital or
7:37home to a funeral facility is $300,000 in bombing runs a $635 other preparation
7:46of the body like makeup and dressing is about $250 use of the funeral home
7:50facilities and staff for viewing and ceremony will be about $915 the median
7:56hearst rental is $318 printing up memorial cards runs a hundred and
8:00fifty-five dollars and the median price of a metal casket is 2395 bucks and
8:07headstone and burial plot which like all real estate can vary widely in price
8:11depending on what kind of neighbors you want with everything included the price
8:15of a funeral in the us- can run as high as $15,000 or more thanks for all this
8:21is to say that dying in the United States is really really expensive even
8:26after you’re dead and funeral costs can be hard to absorb especially when
8:30combined with the massive doctor and hospital bills that can be a side effect
8:34of dying if you’re lucky enough to die at an advanced age as most people in the
8:38us- do social security does pay out a $255 death benefit but that’s not gonna
8:44cover your costs that won’t even get you involved so what can we do to reduce
8:48some of the costs of dying the government does take a role in reducing


Death Tax

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8:51the cost of death the Federal Trade Commission regulates the funeral
8:55industry and has very strict rules about what a funeral provider can and can’t
9:00charge for and which charges are required a lot of changes to Medicare in
9:04recent years have looked at ways to cut costs from paying for hospice care to
9:07reimbursing doctors for discussing death with their patients which takes this
9:12very nicely to what we as individuals can do to reduce some of those costs
9:17make a plan study after study recommends that the best strategy to manage
9:21expenses for indiv life care and funeral costs is planning doctors funeral
9:27directors and all manner of experts advises to put an advance directive in
9:31place right now we’ll make a plan for your assets and get some life insurance
9:35the problem is mortality is a difficult thing to think about 2.1
9:39seventeenth-century frenchmen one cannot look directly at either the Sun or death
9:45which is to say people just like contemplating their own death according
9:48to the Pew Research Foundation in 2013
9:51only thirty-seven percent of Americans reported that they had given a quote
9:56great deal of thought to their individual life wishes for medical care
9:59and only 33% had put their wishes in writing but when it comes to medical
10:04costs are dying putting advance directives in place with doctors and
10:08loved ones can be very effective if you don’t want doctors to go to extreme and
10:12extremely expensive measures to preserve your life at all costs make sure

Death Tax
10:16everybody knows about it when you’re not in a position to make these decisions
10:19for yourself you want to be sure that whoever is making the decisions knows
10:23what you want and when it comes to funerals some of those costs can be
10:26dealt with before you’re dead
10:28life insurance is readily available in United States and is a pretty
10:32straightforward way to ensure that your loved ones at least aren’t stuck with
10:36the bill for marrying you and what does happen to your debt when you die your
10:40relatives have to pay it

Death Tax

Death Tax
10:41well it all depends on the type of debt and the state that you live in if you
10:45died owing credit card debt and your state doesn’t have the money to pay it
10:49off in many circumstances your family won’t be legally obligated to pay back
10:54the creditors just about the money but that doesn’t stop debt collectors from
10:57trying to get families to pay up if you find yourself being asked to pay off a
11:01dead relatives debt it’s worth investigating the state law to find out
11:05if you really have an obligation to do so if you do make it through all the end
11:10of life costs and you’re still solvent your also gonna need a plan for your
11:13assets we don’t have time to get into the realm

Death Tax
11:16financial planning and estate taxes but the good news is if you’ve made it this
11:19far are probably good planner or at least have done some good advice
11:23the least you can do is have a will to guide the distribution of your assets a
11:26good financial planner can let you in on all the ways you can move your money to
11:31the areas you really love while avoiding expenses like probate court in the state
11:35taxes the fact is nobody likes to think about death but get over it they’re huge
11:39economic reasons on both the societal level and on the personal level to face
11:43up to it while a cost-effective death is good for society it may be small comfort
11:47to your family but if everything is taken care of in advance your family can
11:52focus on grieving rather than straightening out your finances thanks
11:56for watchin CNX week and we talked about the other unavoidable taxes thanks for
12:01watching crash course economics which is made with the help of all these fine
12:04people they’re also working on coming to terms with their own mortality you can

Death Tax
12:08help keep crash course free for everyone forever by supporting the show at
12:11Peachtree on a tree on is a voluntary subscription service where you give what
12:15you can everyone and get rewards thanks for watching and don’t forget to make an
12:19advance directive


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Death Tax

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