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Life, Death and World Inequality

Author

Listed:
  • Juan Cordoba

    (Iowa State University)

  • Marla Ripoll

    (University of Pittsburgh)

Abstract

Life expectancy around the world has increased substantially since 1970. In contrast, consumption per capita has fallen in some countries, remained stagnant, or sharply increased in others. What are the welfare gains of the systematic increase in life expectancy around the world? How does a "full measure" of per capita income, one that adjusts for life expectancy, compare to standard measures of world inequality that only consider income? This paper documents how standard models used to answer these questions give rise to a number of predictions that are inconsistent with well-documented evidence, particularly on the value of statistical life. It then proposes a generalized model with non-separable preferences that exhibits a low elasticity of intertemporal substitution and a low degree of mortality aversion. The non-separable model reverts the counterfactual predictions of the standard model, and it also provides plausible measures of changes in welfare and inequality around the world.

Suggested Citation

  • Juan Cordoba & Marla Ripoll, 2012. "Life, Death and World Inequality," 2012 Meeting Papers 925, Society for Economic Dynamics.
    • Handle: RePEc:red:sed012:925
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    References listed on IDEAS

    as
    1. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2005. "The Quantity and Quality of Life and the Evolution of World Inequality," American Economic Review, American Economic Association, vol. 95(1), pages 277-291, March.
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    7. Larry G. Epstein & Stanley E. Zin, 2013. "Substitution, risk aversion and the temporal behavior of consumption and asset returns: A theoretical framework," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 12, pages 207-239, World Scientific Publishing Co. Pte. Ltd..
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    13. Dan Usher, 1973. "An Imputation to the Measure of Economic Growth for Changes in Life Expectancy," NBER Chapters, in: The Measurement of Economic and Social Performance, pages 193-232, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Cordoba, Juan Carlos, 2012. "Children and the Wealth of Nations," Staff General Research Papers Archive 34989, Iowa State University, Department of Economics.

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    JEL classification:

    • D - Microeconomics
    • J - Labor and Demographic Economics

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