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The Discount Rate and the Value of Remaining Years of Life

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  • Hartwick, John

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 age 30 (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

  • Hartwick, John, 2008. "The Discount Rate and the Value of Remaining Years of Life," Queen's Economics Department Working Papers 273668, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:273668
    DOI: 10.22004/ag.econ.273668
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