The Death Tax

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

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
1:30history
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
4:13expensive
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
5:01surveys
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

Death Tax

Death Tax
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

 

Death Tax

Death Tax