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Age effects in mortality risk valuation

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  • Pinto Prades, Jose Luis

    (Glasgow Caledonian University, Glasgow, Scotland)

  • Brey Sanchez, Raul

    (University Pablo de Olavide, Sevilla, Spain)

Abstract

We provided more evidence on the functional relationship between willingness to pay for risk reductions and age (the senior discount). We overcome many of the limitations of previous literature that has dealt with this problem, namely, the influence of the assumptions used in statistical models on the final results. Given our large sample size (n=6024) we can use models that are very demanding on sample size. We show that all models predict the same inverse U-shaped relationship between WTO for risk reductions and age. We use several models, parametric (linear, cuadratic, dummies), semi-nonparametric and non-parametric. Results are consistent under all the different models. We also compare the marginal and the total approach and we show that they provide similar results. However, we also overcome one of the limitations of the total approach, that is, it includes the effects of all socioeconomic characteristics that are correlated with age. Given our sample size, we compare age groups that are similar in education and income. We observe that the seniority effect is only present for low income people.

Suggested Citation

  • Pinto Prades, Jose Luis & Brey Sanchez, Raul, 2014. "Age effects in mortality risk valuation," Health Economics Working Paper Series 201401, Glasgow Caledonian University, Yunus Centre.
  • Handle: RePEc:yun:hewpse:201401
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    References listed on IDEAS

    as
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