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

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Author Info
Thomas J. Kniesner (Syracuse University)
W. Kip Viscusi (Harvard University)
James P. 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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File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1524&context=bejeap
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Publisher Info
Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): contributions.5 (2006)
Issue (Month): 1 ()
Pages:
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Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:1:n:4

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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
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law

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. 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)
  2. 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)
  3. 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)
  4. 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:
  5. 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)
    Other versions:
  6. 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)
  7. 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)
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  8. 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)
  9. 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)
  10. 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)
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. 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!]
    Other versions:
  3. 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!]
  4. Jon Strand, 2005. "Individual and Household Values of Mortality Reductions with Intrahousehold Bargaining," Journal of Risk and Uncertainty, Springer, vol. 31(2), pages 217-236, September. [Downloadable!] (restricted)
  5. Anna Alberini & Maureen Cropper & Alan Krupnick & Nathalie Simon, 2006. "Willingness to pay for mortality risk reductions: Does latency matter?," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 231-245, May. [Downloadable!] (restricted)
    Other versions:
  6. Isaac Ehrlich & Yong Yin, 2005. "Explaining Diversities in Age-Specific Life Expectancies and Values of Life Saving: A Numerical Analysis," Journal of Risk and Uncertainty, Springer, vol. 31(2), pages 129-162, September. [Downloadable!] (restricted)
    Other versions:
  7. 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.
  8. 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:
  9. Bommier, Antoine & Villeneuve, Bertrand, 2008. "Risk Aversion and the Value of Risk to Life," MPRA Paper 11943, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  10. Soma Bhattacharya & Anna Alberini & Maureen Cropper, 2007. "The value of mortality risk reductions in Delhi, India," Journal of Risk and Uncertainty, Springer, vol. 34(1), pages 21-47, February. [Downloadable!] (restricted)
    Other versions:
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