Rates of time preference and valuations of the duration of life

Abstract This paper develops a multi-period Markov model of the lifetime choice of occupational fatality risks. The empirical model analyzes the wage effects of job risks using the 1982 University of Michigan Panel Study of Income Dynamics in conjunction with death statistics from the U.S. National Traumatic Occupational Fatality Survey. Evidence regarding workers' intertemporal choices with respect to risks with long-term implications is broadly consistent with rational behavior. Workers' implicit real rate of time preference with respect to future life years equals approximately 11 percent. This rate of time preference decreases with education.

[1]  Michael J. Moore,et al.  The Quantity-Adjusted Value of Life , 1988 .

[2]  Shulamit Kahn,et al.  Efficient Estimation of Structural Hedonic Systems , 1988 .

[3]  A. C. Pigou.  Economics of welfare , 1920 .

[4]  Richard J. Zeckhauser,et al.  Where Now for Saving Lives , 1976 .

[5]  Richard J. Zeckhauser,et al.  Survival versus Consumption , 1984 .

[6]  Michael J. Moore,et al.  Doubling the Estimated Value of Life: Results Using New Occupational Fatality Data , 1988 .

[7]  Richard H. Thaler,et al.  The Value of Saving a Life: Evidence from the Labor Market , 1976 .

[8]  Victor R. Fuchs.  The Health Economy , 1986 .

[9]  R. Zeckhauser,et al.  Valuing health--a "priceless" commodity. , 1987, The American economic review.

[10]  M. Machina.  Choice under Uncertainty: Problems Solved and Unsolved , 1987 .

[11]  Sherwin Rosen,et al.  The value of changes in life expectancy , 1988 .

[12]  Jerry A. Hausman,et al.  Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables , 1979 .

[13]  Bryan C. Conley,et al.  The Value of Human Life in the Demand for Safety: Extension and Reply , 1976 .

[14]  Dermot Gately,et al.  Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables: Comment , 1980 .

[15]  W. Arthur.  The economics of risks to life. , 1979, The American economic review.

[16]  W. Kip Viscusi,et al.  Employment Hazards: An Investigation of Market Performance , 1979 .

[17]  A. Tversky,et al.  Rational choice and the framing of decisions , 1990 .

[18]  W. Kip Viscusi,et al.  Risk by Choice: Regulating Health and Safety in the Workplace , 1983 .

[19]  D. Commerce.  Statistical abstract of the United States , 1978 .

[20]  R. L. Keeney,et al.  Decisions with Multiple Objectives: Preferences and Value Trade-Offs , 1977, IEEE Transactions on Systems, Man, and Cybernetics.

[21]  Gary A. Zarkin,et al.  Worker Preference and Market Compensation for Job Risk , 1988 .

[22]  Lester Lave,et al.  The Strategy of Social Regulation , 1981 .