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Discount Rate for Health Benefits and the Value of Life in India

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  • K.R. Shanmugam

    () (Madras School of Economics)

Abstract

This study contributes to the literature by estimating discount rate for environmental health benefits and value of statistical life of workers in India. The discount rate is imputed from wage-risk trade-offs in which workers decide whether to accept a risky job with higher wages. The estimated real discount rate ranges between 2.7 and 3 percent, which is closer to the financial market rate for the study period and consistent with earlier studies from developed nations. The estimated value of life is Rs. 20 (US $ 1.107) million. The results of the study can aid policymakers, international agencies and other researchers in evaluating health projects in India and other developing countries.

Suggested Citation

  • K.R. Shanmugam, 2011. "Discount Rate for Health Benefits and the Value of Life in India," Working Papers 2011-060, Madras School of Economics,Chennai,India.
  • Handle: RePEc:mad:wpaper:2011-060
    as

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    References listed on IDEAS

    as
    1. Moore, Michael J & Viscusi, W Kip, 1988. "The Quantity-Adjusted Value of Life," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 369-388, July.
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    3. Erhun Kula, 2004. "Estimation of a Social Rate of Interest for India," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(1), pages 91-99.
    4. Viscusi, W. Kip & Moore, Michael J., 1989. "Rates of time preference and valuations of the duration of life," Journal of Public Economics, Elsevier, vol. 38(3), pages 297-317, April.
    5. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    6. R. A. Sharma & M. J. McGregor & J. F. Blyth, 1991. "The Social Discount Rate For Land-Use Projects In India," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(1), pages 86-92.
    7. van der Pol, Marjon & Cairns, John, 2001. "Estimating time preferences for health using discrete choice experiments," Social Science & Medicine, Elsevier, vol. 52(9), pages 1459-1470, May.
    8. Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
    9. Dreyfus, Mark K & Viscusi, W Kip, 1995. "Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 79-105, April.
    10. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    11. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-684, September.
    12. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    13. repec:reg:rpubli:282 is not listed on IDEAS
    14. Moore, Michael J. & Viscusi, W. Kip, 1990. "Discounting environmental health risks: New evidence and policy implications," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 51-62, March.
    15. Johannesson, Magnus & Johansson, Per-Olov, 1997. "Quality of life and the WTP for an increased life expectancy at an advanced age," Journal of Public Economics, Elsevier, vol. 65(2), pages 219-228, August.
    16. Dermot Gately, 1980. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables: Comment," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 373-374, Spring.
    17. Shanmugam, K. R., 2006. "Rate of time preference and the quantity adjusted value of life in India," Environment and Development Economics, Cambridge University Press, vol. 11(05), pages 569-583, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Expected length of life; value of statistical life; time preference rate;

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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