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Discounting Statistical Lives

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  • Horowitz, John K
  • Carson, Richard T

Abstract

Benefit-cost analysis of government projects that reduce health risks over an extended period of time requires an estimate of the value of a future life. This in turn requires a discount rate. We suggest and carry out a method to estimate the discount rate using observations on discrete choices between projects with different time horizons. This method is implemented in a survey context. For our primary example, the estimated median discount rate is close to the market rate. A substantial proportion of the sample is estimated to have quite low discount rates. We provide some evidence that discount rates may differ for different types of risks. Copyright 1990 by Kluwer Academic Publishers

Suggested Citation

  • Horowitz, John K & Carson, Richard T, 1990. "Discounting Statistical Lives," Journal of Risk and Uncertainty, Springer, vol. 3(4), pages 403-413, December.
    • Handle: RePEc:kap:jrisku:v:3:y:1990:i:4:p:403-13
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    Citations

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    Cited by:

    1. Richard T. Carson & Robert Cameron Mitchell, 2006. "Public Preferences Toward Environmental Risks: The Case of Trihalomethanes," Chapters, in: Anna Alberini & James R. Kahn (ed.), Handbook on Contingent Valuation, chapter 19, Edward Elgar Publishing.
    2. Anna Alberini & Stefania Tonin & Margherita Turvani & Aline Chiabai, 2007. "Paying for permanence: Public preferences for contaminated site cleanup," Journal of Risk and Uncertainty, Springer, vol. 34(2), pages 155-178, April.
    3. James Hammitt & Jin-Tan Liu, 2004. "Effects of Disease Type and Latency on the Value of Mortality Risk," Journal of Risk and Uncertainty, Springer, vol. 28(1), pages 73-95, January.
    4. Therese Grijalva & Jayson Lusk & W. Shaw, 2014. "Discounting the Distant Future: An Experimental Investigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(1), pages 39-63, September.
    5. Anna Alberini & Maureen Cropper & Alan Krupnick & Nathalie Simon, 2006. "Willingness to pay for mortality risk reductions: Does latency matter?," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 231-245, May.
    6. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    7. S. Höjgård & U. Enemark & C. H. Lyttkens & A. Lindgren & T. Troëng & H. Weibull, 2002. "Discounting and clinical decision making: Physicians, patients, the general public, and the management of asymptomatic abdominal aortic aneurysms," Health Economics, John Wiley & Sons, Ltd., vol. 11(4), pages 355-370, June.
    8. Andrew Meyer, 2013. "Estimating discount factors for public and private goods and testing competing discounting hypotheses," Journal of Risk and Uncertainty, Springer, vol. 46(2), pages 133-173, April.
    9. Anna Alberini & Aline Chiabai, 2007. "Discount Rates in Risk Versus Money and Money Versus Money Tradeoffs," Risk Analysis, John Wiley & Sons, vol. 27(2), pages 483-498, April.
    10. Francis Asenso‐Boadi & Tim J. Peters & Joanna Coast, 2008. "Exploring differences in empirical time preference rates for health: an application of meta‐regression," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 235-248, February.
    11. John A. Cairns & Marjon M. Van Der Pol, 1997. "Saving future lives. A comparison of three discounting models," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 341-350, July.
    12. Bond, Craig A. & Cullen, Kelly Giraud & Larson, Douglas M., 2009. "Joint estimation of discount rates and willingness to pay for public goods," Ecological Economics, Elsevier, vol. 68(11), pages 2751-2759, September.
    13. W. Kip Viscusi & Joel Huber, 2006. "Hyperbolic Discounting of Public Goods," NBER Working Papers 11935, National Bureau of Economic Research, Inc.
    14. Delucchi, Mark A., 2004. "Some Conceptual and Methodological Issues in the Analysis of the Social Cost of Motor-Vehicle Use. Report #2 in the series: The Annualized Social Cost of Motor-Vehicle Use in the United States, based ," Institute of Transportation Studies, Working Paper Series qt4331q870, Institute of Transportation Studies, UC Davis.
    15. John A. Cairns, 1994. "Valuing future benefits," Health Economics, John Wiley & Sons, Ltd., vol. 3(4), pages 221-229, July.
    16. Jeffery L. Guyse & L. Robin Keller & Candice H. Huynh, 2020. "Valuing Sequences of Lives Lost or Saved Over Time: Preference for Uniform Sequences," Decision Analysis, INFORMS, vol. 17(1), pages 24-38, March.
    17. Delucchi, Mark A., 2004. "Some Conceptual and Methodological Issues in the Analysis of the Social Cost of Motor-Vehicle Use: Report #2 in the Series: The Annualized Social Cost of Motor-Vehicle Use in the United States, based ," Institute of Transportation Studies, Working Paper Series qt5pj8r7pq, Institute of Transportation Studies, UC Davis.
    18. McDonald, R.L. & Chilton, S.M. & Jones-Lee, M.W. & Metcalf, H.R.T., 2017. "Evidence of variable discount rates and non-standard discounting in mortality risk valuation," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 152-167.
    19. W. Viscusi & Joel Huber & Jason Bell, 2008. "Estimating discount rates for environmental quality from utility-based choice experiments," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 199-220, December.
    20. Magnus Johannesson & Per‐Olov Johansson, 1996. "The discounting of lives saved in future generations—some empirical results," Health Economics, John Wiley & Sons, Ltd., vol. 5(4), pages 329-332, July.
    21. Jan Abel Olsen, 1993. "Time preferences for health gains: An empirical investigation," Health Economics, John Wiley & Sons, Ltd., vol. 2(3), pages 257-265, October.

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