IDEAS home Printed from https://ideas.repec.org/p/qed/wpaper/1191.html
   My bibliography  Save this paper

The Discount Rate And The Value Of Remaining Years Of Life

Author

Listed:
  • John Hartwick

Abstract

We back out an estimate of a personal discount rate of between 3 and 4 percent for a person with a life expectancy of 74 years who dies at age30 (or 40) and has a value of statistical life of $6.3 million. Central to these calculations is the series generated by Murphy and Topel of value of life years (the dollar value of consumption plus the dollar value of leisure, with some smoothing for income in retirement). We employ the Makeham"model" of life expectancy in our calculations.

Suggested Citation

  • John Hartwick, 2008. "The Discount Rate And The Value Of Remaining Years Of Life," Working Paper 1191, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1191
    as

    Download full text from publisher

    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1191.pdf
    File Function: First version 2008
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Azfar, Omar, 1999. "Rationalizing hyperbolic discounting," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 245-252, February.
    2. Kevin M. Murphy & Robert H. Topel, 2006. "The Value of Health and Longevity," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 871-904, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hartwick, John M., 2012. "The discount rate and the value of remaining years of life," Economics Letters, Elsevier, vol. 114(1), pages 51-53.
    2. Christian Gollier, 2020. "Cost–benefit analysis of age‐specific deconfinement strategies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1746-1771, December.
    3. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Should we subsidize longevity?," Working Papers halshs-00586236, HAL.
    4. Ryan Edwards, 2013. "The cost of uncertain life span," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1485-1522, October.
    5. James K. Hammitt, 2020. "Valuing mortality risk in the time of COVID-19," Journal of Risk and Uncertainty, Springer, vol. 61(2), pages 129-154, October.
    6. Louis-Philippe Beland & Abel Brodeur & Taylor Wright, 2020. "COVID-19, Stay-at-Home Orders and Employment: Evidence from CPS Data," Carleton Economic Papers 20-04, Carleton University, Department of Economics, revised 19 May 2020.
    7. Chen, Li-Shiun & Wang, Ping & Yao, Yao, 2018. "Power of personalized smoking cessation: A unified lifecycle framework for policy evaluation," Working Paper Series 20333, Victoria University of Wellington, School of Economics and Finance.
    8. Svetlana Pashchenko & Ponpoje (Poe) Porapakkarm & Mariacristina De Nardi, 2017. "The Lifetime Costs of Bad Health," 2017 Meeting Papers 533, Society for Economic Dynamics.
    9. Kuhn, Michael & Frankovic, Ivan & Wrzaczek, Stefan, 2017. "Medical Progress, Demand for Health Care, and Economic Performance," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168249, Verein für Socialpolitik / German Economic Association.
    10. Kai Hong & Peter A. Savelyev & Kegon T. K. Tan, 2020. "Understanding the Mechanisms Linking College Education with Longevity," Journal of Human Capital, University of Chicago Press, vol. 14(3), pages 371-400.
    11. Scott, Andrew J., 2023. "The economics of longevity – An introduction," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    12. Strulik, Holger, 2023. "Hooked on weight control: An economic theory of anorexia nervosa and its impact on health and longevity," Journal of Health Economics, Elsevier, vol. 88(C).
    13. Scherer, F.M., 2010. "Pharmaceutical Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 539-574, Elsevier.
    14. Joseph Findlay & Caleb Piche-Larocque & Akhter Faroque, 2022. "Cost Estimation and Health Benefits Determinants of Medical Innovations Across Canadian Provinces," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(9), pages 1-25, September.
    15. Toole, Andrew A. & Czarnitzki, Dirk, 2007. "Life Scientist Mobility from Academe to Industry: Does Academic Entrepreneurship Induce a Costly ?Brain Drain? on the Not-for-Profit Research Sector?," ZEW Discussion Papers 07-072, ZEW - Leibniz Centre for European Economic Research.
    16. Tomas J. Philipson & Eric Sun, 2008. "Is the Food And Drug Administration Safe And Effective?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 85-102, Winter.
    17. Guccio, C. & Lisi, D., 2014. "Social interactions in inappropriate behavior for childbirth services: Theory and evidence from the Italian hospital sector," Health, Econometrics and Data Group (HEDG) Working Papers 14/28, HEDG, c/o Department of Economics, University of York.
    18. Schultz, T. Paul, 2010. "Population and Health Policies," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4785-4881, Elsevier.
    19. Lakdawalla, Darius N. & Seabury, Seth A., 2012. "The welfare effects of medical malpractice liability," International Review of Law and Economics, Elsevier, vol. 32(4), pages 356-369.
    20. Roller, Slavek, 2021. "Institutional investors’ sustainability policies and the outcomes for the healthcare sector portfolios," Health Policy, Elsevier, vol. 125(10), pages 1367-1376.

    More about this item

    Keywords

    Discount rate; Value of life;

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:1191. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.