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A Study of the Sensitivity of Longevity-Adjusted Income Measures

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  • Grégory Ponthière

    (CREPP - Center of Research in Public Economics and Population Economics - Université de Liège, FNRS - Fonds de la Recherche Scientifique - Fonds de la Recherche Scientifique [FNRS])

Abstract

This paper aims to explore the sensitivity of longevity-adjusted measures of income, which have become increasingly popular as indicators of basic standards of living. For that purpose, longevity-adjusted income measures are computed for post-war Japan under various sets of postulates, concerning the temporal horizon regarded as relevant for the measurement of welfare, the ethical treatment of age structures, the degree of endogeneity of longevity, the value of a statistical life (VSL) used in the calibration of preference parameters, and preference parameters themselves (for a given VSL). Pictures of Japan's development are significantly sensitive to those postulates, suggesting that longevity-adjusted income measures should be computed under not one--as is usually done--but several assumption sets, to account for the difficulty of solving the income/longevity weighting problem. Hence, this study casts new light on the trade-offs raised by the aggregation of economic and demographic achievements into a preferences-based composite indicator.

Suggested Citation

  • Grégory Ponthière, 2008. "A Study of the Sensitivity of Longevity-Adjusted Income Measures," Post-Print halshs-00754276, HAL.
    • Handle: RePEc:hal:journl:halshs-00754276
    DOI: 10.1080/13600810802264464
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    Cited by:

    1. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 41-74, March.
    2. Leroux, Marie-Louise & Ponthiere, Gregory, 2013. "Utilitarianism and unequal longevities: A remedy?," Economic Modelling, Elsevier, vol. 30(C), pages 888-899.
    3. Shaun M. Da Costa, 2020. "The impact of the Ebola crisis on mortality and welfare in Liberia," Health Economics, John Wiley & Sons, Ltd., vol. 29(12), pages 1517-1532, December.
    4. Da Costa, Shaun, 2023. "Estimating the welfare gains from anti-retroviral therapy in Sub-Saharan Africa," Journal of Health Economics, Elsevier, vol. 90(C).

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