Time in the microeconomics of consumption

The duration of human life has been increasing steadily in most parts of the world for at least the past 50 years, and in many cases over a much longer time period. The well-known Preston Curve shows that the material standard of living as reflected in per capita real income is associated with the mean life expectancy, but with a weaker association at high levels of income. In this chapter we discuss the impact of a consumer’s choice on his or her life expectancy. In affluent societies, lifestyle choices have much greater effects on individuals’ lifespans: people have more discretionary income and infectious diseases are less prevalent. Affluent people therefore have far greater control over their own personal life expectancies than people in less fortunate circumstances. Although most people know that the composition of their diet and their drinking, smoking and exercise habits influence their life expectancies, genetic factors and interdependencies among health-affecting choices make such effects highly uncertain. Empirical studies nonetheless show that high education elasticities are associated with choices that increase the expected duration of life, perhaps because old age is less unattractive to people who derive utility from cerebral activities. Oeppen and Vaupel have shown that the Preston Curve underestimates long-term increases in life expectancy. We believe that the Preston Curve is shifting upward over time as a consequence of slow but persistent infrastructural improvements to public knowledge, communications and institutions. Our trend analysis of time use implies a long-run reduction of remunerative working time toward levels as low as 1,300 hours per year. This implies that we expect that the time allocated to work will drop to 7 or 8 percent of the 900,000 hours (102.7 years) of life that we expect in the most post-industrial regions in the very long run.