Heat, Mortality, and Life-Cycle Welfare

Higher atmospheric carbon concentrations increase extreme heat on both the extensive and intensive margins. We develop a stochastic life-cycle model in which daily heat shocks raise mortality risk, agents adapt to protect themselves, and health investment slows biological aging. We calibrate it to U.S. data and study the incidence of a major damage channel — heat-induced mortality — showing how exogenous differences in wage income generate unequal welfare losses across the income distribution. Comparing life-cycle outcomes under daily heat-shock distributions associated with SSP5-8.5 to an SSP1-2.6 benchmark, the average agent loses about 0.10 years of life expectancy, and the loss is regressive: 0.31 years for the poorest income decile against 0.05 years for the richest. Welfare losses are substantial and likewise regressive: 0.90% in CEV on average, ranging from 1.23% for the poorest decile to 0.60% for the richest, and conditional on survival to age 50, from 6.48% to 1.32%. Poor agents lose mainly through reduced survival, richer agents through consumption forgone to adaptation. Absent adaptation, both losses are far larger and almost flat in income, so adaptation accounts for essentially the entire income gradient. Climate denial raises welfare losses most among high-income agents.