Life-Cycle Consumption and the Age-Adjusted Value of Life
AbstractOur research examines empirically 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 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, 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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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10266.
Date of creation: Feb 2004
Date of revision:
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Other versions of this item:
- Thomas J. Kniesner & W. Kip Viscusi & James P. Ziliak, 2006. "Life-Cycle Consumption and the Age-Adjusted Value of Life," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 0(1), pages 4.
- J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
- I12 - Health, Education, and Welfare - - Health - - - Health Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-01 (All new papers)
- NEP-EDU-2004-02-01 (Education)
- NEP-HEA-2004-02-01 (Health Economics)
- NEP-MAC-2004-02-01 (Macroeconomics)
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