Monetary values of increasing life expectancy: Sensitivity to shifts of the survival curve

Abstract

Individuals’ monetary values of decreases in mortality risk depend on the magnitude and timing of the risk reduction. We elicited stated preferences among three time paths of risk reduction yielding the same increase in life expectancy (decreasing risk for the next decade, subtracting a constant from or multiplying risk by a constant in all future years) and willingness to pay (WTP) for risk reductions differing in timing and life-expectancy gain. Respondents exhibited heterogeneous preferences over the alternative time paths, with almost 90 percent reporting transitive orderings. WTP is statistically significantly associated with life-expectancy gain (between about 7 and 28 days) and with respondents’ stated preferences over the alternative time paths. Estimated value per statistical life year (VSLY) can differ by time path and averages about $500,000, roughly consistent with conventional estimates obtained by dividing estimated value per statistical life by discounted life expectancy.