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Valuing life over the life cycle

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  • St-Amour, Pascal

Abstract

Adjusting the valuation of life along the (i) person-specific (age, health, wealth) and (ii) mortality risk-specific (beneficial or detrimental, temporary or permanent changes) dimensions is relevant in prioritizing healthcare interventions. These adjustments are provided by solving a life cycle model of consumption, leisure and health choices and the associated Hicksian variations for mortality changes. The calibrated model yields plausible Values of Life Year between 154K$ and 200K$ and Values of Statistical Life close to 6.0M$. The willingness to pay (WTP) and to accept (WTA) compensation are equal and symmetric for one-shot beneficial and detrimental changes in mortality risk. However, permanent, and expected longevity changes are both associated with larger willingness for gains, relative to losses, and larger WTA than WTP. Ageing lowers both variations via falling resources and health, lower marginal continuation utility of living and decreasing longevity returns of changes in mortality.

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  • St-Amour, Pascal, 2024. "Valuing life over the life cycle," Journal of Health Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:jhecon:v:93:y:2024:i:c:s0167629623001194
    DOI: 10.1016/j.jhealeco.2023.102842
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    Cited by:

    1. Kniesner, Thomas J. & Viscusi, W. Kip, 2024. "A Tale of the Tails: The Value of a Statistical Life at the Tails of the Age Distribution," IZA Discussion Papers 16867, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Value of human life; Value of Statistical Life; Gunpoint value; Deterministic Longevity Value; Hicksian Compensating and Equivalent Variations; Willingness to pay; Willingness to Accept Compensation; Mortality; Longevity; Non-Expected Utility;
    All these keywords.

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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