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The Value of Life in General Equilibrium

Author

Listed:
  • Anupam Jena
  • Casey Mulligan
  • Tomas J. Philipson
  • Eric Sun

Abstract

Perhaps the most important change of the last century was the great expansion of life itself -- in the US alone, life expectancy increased from 48 to 78 years. Recent economic estimates confirm this claim, finding that the economic value of the gain in longevity was on par with the value of growth in material well-being, as measured by income per capita. However, ever since Malthus, economists have recognized that demographic changes are linked to economic behavior and vice versa. Put simply, living with others who live 78 years is different than living with others who live only 48 years, so that valuing the extra 30 years of life is not simply a matter of valuing the extra years a single individual lives. The magnitude by which such valuations differ is overstated when there are increasing returns to population and is understated under decreasing returns. Focusing on the gains in life expectancy in the United States from 1900 to 2000, we find that a significant part of the value of longer life may be affected by these general equilibrium demographic effects.

Suggested Citation

  • Anupam Jena & Casey Mulligan & Tomas J. Philipson & Eric Sun, 2008. "The Value of Life in General Equilibrium," NBER Working Papers 14157, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:14157
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andr'es Riquelme & Marcela Parada, 2016. "The Value of A Statistical Life in Absence of Panel Data: What can we do?," Papers 1603.00568, arXiv.org.
    2. Moshe Hazan, 2009. "Longevity and Lifetime Labor Supply: Evidence and Implications," Econometrica, Econometric Society, vol. 77(6), pages 1829-1863, November.
    3. Hoyt Bleakley, 2009. "Comment on "When Does Improving Health Raise GDP?"," NBER Chapters,in: NBER Macroeconomics Annual 2008, Volume 23, pages 205-220 National Bureau of Economic Research, Inc.
    4. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2012. "The Value of a Statistical Life: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 74-87, February.
    5. Mary Evans & V. Smith, 2010. "Measuring how risk tradeoffs adjust with income," Journal of Risk and Uncertainty, Springer, vol. 40(1), pages 33-55, February.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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