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Valuing Life as an Asset, as a Statistic and at Gunpoint

Author

Listed:
  • Julien Hugonnier
  • Florian Pelgrin
  • Pascal St-Amour

Abstract

Rationalising the stark differences between the human capital and the statistical values of a human life is complicated by the absence of common foundations. We solve a human capital investment model with longevity risk to characterise the human capital. The associated indirect utility yields the willingness to pay against mortality; the marginal willingness to pay solves the value of a statistical life. Indifference between life and certain death characterises the limiting willingness to pay and provides a gunpoint value. A structural estimation reveals similar human capital (300,000) and gunpoint value (251,000) and explains a much larger statistical value (4.98 million) by a strongly concave willingness to pay.

Suggested Citation

  • Julien Hugonnier & Florian Pelgrin & Pascal St-Amour, 2022. "Valuing Life as an Asset, as a Statistic and at Gunpoint," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1095-1122.
    • Handle: RePEc:oup:econjl:v:132:y:2022:i:643:p:1095-1122.
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    File URL: http://hdl.handle.net/10.1093/ej/ueab072
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    Cited by:

    1. Ian W R Martin & Robert S Pindyck, 2021. "Welfare Costs of Catastrophes: Lost Consumption and Lost Lives," The Economic Journal, Royal Economic Society, vol. 131(634), pages 946-969.
    2. James Broughel & Michael Kotrous, 2021. "The benefits of coronavirus suppression: A cost-benefit analysis of the response to the first wave of COVID-19 in the United States," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-20, June.
    3. Jäger, Philipp, 2023. "Can pensions save lives? Evidence from the introduction of old-age assistance in the UK," Ruhr Economic Papers 995, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Canning, David, 2023. "Conducting Cost Benefit Analysis in Expected Utility Units Using Revealed Social Preferences," Working Papers 0722, University of Heidelberg, Department of Economics.

    More about this item

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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