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Life, Death and World Inequality

Author

Listed:
  • Juan Cordoba

    (Iowa State University)

  • Marla Ripoll

    (University of Pittsburgh)

Abstract

Life expectancy around the world has increased substantially since 1970. In contrast, consumption per capita has fallen in some countries, remained stagnant, or sharply increased in others. What are the welfare gains of the systematic increase in life expectancy around the world? How does a "full measure" of per capita income, one that adjusts for life expectancy, compare to standard measures of world inequality that only consider income? This paper documents how standard models used to answer these questions give rise to a number of predictions that are inconsistent with well-documented evidence, particularly on the value of statistical life. It then proposes a generalized model with non-separable preferences that exhibits a low elasticity of intertemporal substitution and a low degree of mortality aversion. The non-separable model reverts the counterfactual predictions of the standard model, and it also provides plausible measures of changes in welfare and inequality around the world.

Suggested Citation

  • Juan Cordoba & Marla Ripoll, 2012. "Life, Death and World Inequality," 2012 Meeting Papers 925, Society for Economic Dynamics.
  • Handle: RePEc:red:sed012:925
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    References listed on IDEAS

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    1. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2005. "The Quantity and Quality of Life and the Evolution of World Inequality," American Economic Review, American Economic Association, vol. 95(1), pages 277-291, March.
    2. Viscusi, W Kip, 1993. "The Value of Risks to Life and Health," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1912-1946, December.
    3. Charles I. Jones & Peter J. Klenow, 2016. "Beyond GDP? Welfare across Countries and Time," American Economic Review, American Economic Association, vol. 106(9), pages 2426-2457, September.
    4. Dan Usher, 1973. "The Measurement of Economic Growth," Working Papers 145, Queen's University, Department of Economics.
    5. Philippe Weil, 1990. "Nonexpected Utility in Macroeconomics," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 29-42.
    6. Rosen, Sherwin, 1988. "The Value of Changes in Life Expectancy," Journal of Risk and Uncertainty, Springer, vol. 1(3), pages 285-304, September.
    7. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
    8. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," Review of Economic Studies, Oxford University Press, vol. 32(2), pages 137-150.
    9. 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.
    10. Kevin M. Murphy & Robert H. Topel, 2006. "The Value of Health and Longevity," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 871-904, October.
    11. Epstein, Larry G & Zin, Stanley E, 1989. "Substitution, Risk Aversion, and the Temporal Behavior of Consumption and Asset Returns: A Theoretical Framework," Econometrica, Econometric Society, vol. 57(4), pages 937-969, July.
    12. repec:reg:rpubli:282 is not listed on IDEAS
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    Cited by:

    1. Juan Cordoba, 2012. "Children and the Wealth of Nations," 2012 Meeting Papers 1052, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • D - Microeconomics
    • J - Labor and Demographic Economics

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