STEVE INSKEEP, host:
The business news starts with the improving finances of an economist. Twenty-five people working in a variety of fields have been named as 2005 MacArthur Fellows. They'll each get half a million dollars over the next five years. One of those so-called genius awards went to Kevin Murphy, an economist at the University of Chicago Graduate School of Business. As NPR's Kathleen Schalch reports, Murphy takes an expansive view of what economics can reveal about the world.
KATHLEEN SCHALCH reporting:
Murphy's work has delved into issues ranging from drug addiction to wage inequality to the value of medical research. He says in questions of public policy, economics has a lot to bring to the table.
Mr. KEVIN MURPHY (Economist): It gives us a perspective that's useful for thinking about why people do what they do and how they're likely to respond if we change those incentives.
SCHALCH: Murphy's latest research focuses on the dollar value of increased life expectancy.
Mr. MURPHY: What we do is based on how people make choices, whether it's choices about whether to smoke or not or whether to take a dangerous job or not or whether to buy a safer car or a less safe car. I mean, these are choices that people make every day that affect, you know, their life expectancy, and affect risks that they take of death in any given situation. And so we try to use that kind of evidence to say, `What does people's behavior tell us about how much they value longevity?'
SCHALCH: A lot, it turns out. On average, people are willing to pay about $500 to reduce their probability of death by one in 10,000, which means that medical research that reduced deaths from cancer by 1 percent would have an economic value to Americans of half a trillion dollars. Murphy says he will use his fellowship to help fund his next project.
Mr. MURPHY: Well, the question we're trying to answer is: What are the key elements of how we get better at producing new ideas or new products or other forms of innovation?
SCHALCH: He's excited about it. He got the news about the MacArthur award on his cell phone as he was driving to work. He called his wife, and then...
Mr. MURPHY: Finished my drive into work and started working.
SCHALCH: Kathleen Schalch, NPR News. Transcript provided by NPR, Copyright NPR.
