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The Cost of Uncertain Life Span

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  • Ryan D. Edwards

Abstract

A considerable amount of uncertainty surrounds life expectancy, the average length of life. The standard deviation in adult life span is about 15 years in the U.S., and theory and evidence suggest it is costly. I calibrate a utility-theoretic model of preferences over length of life and show that one less year in standard deviation is worth about half a mean life year. Differences in the standard deviation exacerbate cross-sectional differences in life expectancy between the U.S. and other industrialized countries, between rich and poor countries, and among poor countries. But accounting for the cost of life-span variance also appears to amplify recently discovered patterns of convergence in world average human well-being. This is partly for methodological reasons and partly because unconditional variance in human length of life, primarily the component due to infant mortality, has exhibited even more convergence than life expectancy. Sustained reductions in the standard deviation of adult life span, which have largely ceased among advanced nations, accounted for about 15 percent of the total economic value of gains against mortality in the U.S. prior to 1950 but only about 5 percent since.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14093.

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Date of creation: Jun 2008
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Handle: RePEc:nbr:nberwo:14093

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Cited by:
  1. Hippolyte D'Albis & Loesse Jacques Esso & Héctor Pifarré I Arolas, 2012. "Mortality Convergence Across High-Income Countries : An Econometric Approach," Post-Print halshs-00755682, HAL.
  2. Shripad Tuljapurkar & Ryan D. Edwards, 2011. "Variance in death and its implications for modeling and forecasting mortality," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 24(21), pages 497-526, March.
  3. Ryan D. Edwards, 2010. "Trends in World Inequality in Life Span Since 1970," NBER Working Papers 16088, National Bureau of Economic Research, Inc.
  4. Hippolyte d'Albis & Loesse Jacques Esso & Héctor Pifarré i Arolas, 2012. "Mortality Convergence Across High-Income Countries: An Econometric Approach," Documents de travail du Centre d'Economie de la Sorbonne 12076, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  5. David Canning, 2010. "Progress in Health around the World," Human Development Research Papers (2009 to present) HDRP-2010-43, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  6. Charles I. Jones & Peter J. Klenow, 2010. "Beyond GDP? Welfare across Countries and Time," NBER Working Papers 16352, National Bureau of Economic Research, Inc.
  7. David Canning, 2007. "Valuing Lives Equally and Welfare Economics," PGDA Working Papers 2707, Program on the Global Demography of Aging.

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