Suppose That a Year of Life Is Worth $100,000, and That

question 62

Essay

Suppose that a year of life is worth $100,000, and that the cost of a new treatment for HIV is $30,000 per year, and that it increases the life expectancy by 3 years. If the discount rate is 3 percent, is the HIV treatment worth the cost to a 30-year-old male who expects to live for 2 more years without treatment.

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Definitions:

Daily Demand

The total requirement or desire for a product or service on a daily basis.

Computers

Electronic devices designed to accept data, perform prescribed mathematical and logical operations at high speed, and display the results.

Expected Value

The sum of all possible values each multiplied by its probability of occurrence.

Binomial Distribution

A probability distribution that models the number of successes in a fixed number of independent Bernoulli trials with the same probability of success.