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The value of changes in life expectancy

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Abstract

Valuation formulas for age-specific mortality risks are derived from life-cycle allocation theory under uncertainty and related to empirical estimates of the value of life. A change in an age-specific mortality risk affects all subsequent survivor functions and reallocates consumption and labor supply over the entire life cycle. The value of eliminating a risk to life at a specific age is the expected present value of consumer surplus from that age forward. Approximate numerical extrapolations from cross-section estimates imply that values decrease rapidly in current age and in the distance between current age and age at risk.

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Authors
  1. Sherwin Rosen
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The University of Chicago

This research was supported by the Environmental Protection Agency and the National Science Foundation, but neither agency is responsible for the contents of this paper.

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Rosen, S. The value of changes in life expectancy. J Risk Uncertainty 1, 285–304 (1988). https://doi.org/10.1007/BF00056139

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