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Life-Cycle Consumption and the Age-Adjusted Value of Life

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Author Info
Thomas Kniesner (Syracuse University)
W. Viscusi (Harvard University)
James Ziliak (University of Kentucky)

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Abstract

Our research presents new evidence on the age pattern of the implicit value of life revealed from workers' differential wages and job safety pairings. Although aging reduces the number of years of life expectancy, aging can affect the value of life through an effect on planned life-cycle consumption. The elderly could, a priori, have the highest implicit value of life if there is a life-cycle plan to defer consumption until old age. We find that largely due to the age pattern of consumption, which is non-constant, the implicit value of life rises and falls over the lifetime in a way that the value for the elderly is higher than the average over all ages or for the young. There are important health policy implications of our empirical results. Because there may be age-specific benefits of programs to save statistical lives, instead of valuing the lives of the elderly at less than the young, health policymakers should more correctly value the lives of the elderly at as much as twice the young because of relatively greater consumption lost when accidental death occurs.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Contributions to Economic Analysis & Policy.

Volume (Year): 5 (2006)
Issue (Month): 1 ()
Pages: 1524-1524
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Handle: RePEc:bep:eapcon:v:5:y:2006:i:1:p:1524-1524

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Related research
Keywords: value of statistical life life cycle consumption job safety

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Find related papers by JEL classification:
J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Ziliak, James P., 1998. "Does the choice of consumption measure matter? An application to the permanent-income hypothesis," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 201-216, February. [Downloadable!] (restricted)
  2. Johansson, Per-Olov, 2002. " On the Definition and Age-Dependency of the Value of a Statistical Life," Journal of Risk and Uncertainty, Springer, vol. 25(3), pages 251-63, November. [Downloadable!] (restricted)
  3. Hwang, Hae-shin & Reed, W Robert & Hubbard, Carlton, 1992. "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 835-58, August. [Downloadable!] (restricted)
  4. V. Kerry Smith & Mary F. Evans & Hyun Kim & Donald H. Taylor, 2004. "Do the Near-Elderly Value Mortality Risks Differently?," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 423-429, 03. [Downloadable!] (restricted)
  5. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages F540-F567, November. [Downloadable!] (restricted)
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  6. Kevin Lang & Sumon Majumdar, 2003. "The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Implications," NBER Working Papers 9911, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Orley Ashenfelter & Michael Greenstone, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," Working Papers 858, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  8. Arthur, W B, 1981. "The Economics of Risks to Life," American Economic Review, American Economic Association, vol. 71(1), pages 54-64, March. [Downloadable!] (restricted)
  9. Rosen, Sherwin, 1988. " The Value of Changes in Life Expectancy," Journal of Risk and Uncertainty, Springer, vol. 1(3), pages 285-304, September.
    Other versions:
  10. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2005. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," NBER Working Papers 11544, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Kevin Lang & Sumon Majumdar, 2004. "The Pricing Of Job Characteristics When Markets Do Not Clear: Theory And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1111-1128, November. [Downloadable!] (restricted)
  12. Garen, John, 1988. "Compensating Wage Differentials and the Endogeneity of Job Riskiness," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 9-16, February. [Downloadable!] (restricted)
  13. W. Kip Viscusi, 2004. "The Value of Life: Estimates with Risks by Occupation and Industry," Economic Inquiry, Oxford University Press, vol. 42(1), pages 29-48, January. [Downloadable!] (restricted)
  14. Johansson, Per-Olov, 2002. "Defining the value of a statistical life: reply," Journal of Health Economics, Elsevier, vol. 21(1), pages 177-178, January. [Downloadable!] (restricted)
  15. Johannesson, Magnus & Johansson, Per-Olov & Lofgren, Karl-Gustaf, 1997. "On the Value of Changes in Life Expectancy: Blips versus Parametric Changes," Journal of Risk and Uncertainty, Springer, vol. 15(3), pages 221-39, December. [Downloadable!] (restricted)
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  16. Blomqvist, Ake, 2002. "Defining the value of a statistical life: a comment," Journal of Health Economics, Elsevier, vol. 21(1), pages 169-175, January. [Downloadable!] (restricted)
  17. Pollak, Robert A, 1969. "Conditional Demand Functions and Consumption Theory," The Quarterly Journal of Economics, MIT Press, vol. 83(1), pages 60-78, February. [Downloadable!] (restricted)
  18. Black, Dan A & Kniesner, Thomas J, 2003. " On the Measurement of Job Risk in Hedonic Wage Models," Journal of Risk and Uncertainty, Springer, vol. 27(3), pages 205-20, December. [Downloadable!] (restricted)
  19. Joseph E. Aldy & W. Kip Viscusi, 2004. "Age Variations in Workers' Value of Statistical Life," NBER Working Papers 10199, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Johansson, Per-Olov, 2001. "Is there a meaningful definition of the value of a statistical life?," Journal of Health Economics, Elsevier, vol. 20(1), pages 131-139, January. [Downloadable!] (restricted)
  21. Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  22. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Emre Ozdenoren & Stephen Salant & Dan Silverman, 2006. "Willpower and the Optimal Control of Visceral Urges," Economics Working Papers 0069, Institute for Advanced Study, School of Social Science. [Downloadable!]
    Other versions:
  2. Perry Singleton, 2008. "The Effect of Disability Insurance on Health Investment: Evidence from the VA Disability Compensation Program," Center for Policy Research Working Papers 105, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  3. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2007. "Pinning Down the Value of Statistical Life," IZA Discussion Papers 3107, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. W. Viscusi, 2008. "How to value a life," Journal of Economics and Finance, Springer, vol. 32(4), pages 311-323, October. [Downloadable!] (restricted)
  5. Viscusi, W. Kip & Aldy, Joseph, 2006. "Labor Market Estimates of the Senior Discount for the Value of Statistical Life," Discussion Papers dp-06-12, Resources For the Future. [Downloadable!]
    Other versions:
  6. Per-Olov JOHANSSON, 2006. "On the definition and estimation of the value of a “statistical life”," Departemental Working Papers 2006-23, Department of Economics University of Milan Italy. [Downloadable!]
  7. Aldy, Joseph E. & Viscusi, W. Kip, 2007. "Age Differences in the Value of Statistical Life: Revealed Preference Evidence," Discussion Papers dp-07-05, Resources For the Future. [Downloadable!]
  8. Thomas J. Kniesner & W. Kip Viscusi, 2005. "Value of a Statistical Life: Relative Position vs. Relative Age," American Economic Review, American Economic Association, vol. 95(2), pages 142-146, May. [Downloadable!]
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