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Valuing gains in life expectancy: Clarifying some ambiguities

Author

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  • Michael Jones-Lee
  • Susan Chilton
  • Hugh Metcalf
  • Jytte Nielsen

Abstract

It is well-understood that a given gain in life expectancy can, in principle, be generated by any one of an infinite number of different types of perturbation in an individual’s survival function. Since it seems unlikely that the typical individual will be indifferent between these various types of perturbation, the idea that there exists a unique willingness to pay-based Value of a Statistical Life Year (VSLY), even for individuals within a given age-group, appears to be ill-founded. This paper examines the issue from a theoretical perspective. Within the context of a simple multi-period model it transpires that if gains in life expectancy are computed on an undiscounted basis then it will indeed be necessary to adjust the magnitude of the VSLY to accommodate the nature of the perturbation in the survival function, as well as the age of those affected. If, by contrast, gains in life expectancy are computed on an appropriately discounted basis then a unique VSLY will be applicable in all cases. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Michael Jones-Lee & Susan Chilton & Hugh Metcalf & Jytte Nielsen, 2015. "Valuing gains in life expectancy: Clarifying some ambiguities," Journal of Risk and Uncertainty, Springer, vol. 51(1), pages 1-21, August.
    • Handle: RePEc:kap:jrisku:v:51:y:2015:i:1:p:1-21
    DOI: 10.1007/s11166-015-9221-8
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    Cited by:

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    3. St-Amour, Pascal, 2024. "Valuing life over the life cycle," Journal of Health Economics, Elsevier, vol. 93(C).
    4. Hammitt, James K. & Tuncel, Tuba, 2023. "Monetary values of increasing life expectancy: sensitivity to shifts of the survival curve," TSE Working Papers 23-1416, Toulouse School of Economics (TSE).
    5. McDonald, R.L. & Chilton, S.M. & Jones-Lee, M.W. & Metcalf, H.R.T., 2017. "Evidence of variable discount rates and non-standard discounting in mortality risk valuation," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 152-167.
    6. Adler, Matthew, 2020. "What should we spend to save lives in a pandemic? A critique of the value of statistical life," LSE Research Online Documents on Economics 105283, London School of Economics and Political Science, LSE Library.
    7. Hammitt, James K. & Haninger, Kevin, 2017. "Valuing nonfatal health risk as a function of illness severity and duration: Benefit transfer using QALYs," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 17-38.
    8. Hammitt, James K., 2023. "Consistent Valuation of a Reduction in Mortality Risk using Values per Life, Life Year, and Quality-Adjusted Life Year," TSE Working Papers 23-1431, Toulouse School of Economics (TSE).
    9. James K. Hammitt & Tuba Tunçel, 2023. "Monetary values of increasing life expectancy: Sensitivity to shifts of the survival curve," Journal of Risk and Uncertainty, Springer, vol. 67(3), pages 239-269, December.
    10. Arroyos-Calvera, Danae & Covey, Judith & Loomes, Graham & McDonald, Rebecca, 2019. "The efficiency-equity trade-off, self-interest, and moral principles in health and safety valuation," Social Science & Medicine, Elsevier, vol. 238(C), pages 1-1.

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    More about this item

    Keywords

    Valuing gains in life expectancy; VSLY; VSL; J17;
    All these keywords.

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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