The Value of Life in General Equilibrium

47 Pages Posted: 16 Jul 2008 Last revised: 8 Sep 2010

See all articles by Anupam B. Jena

Anupam B. Jena

Harvard University; National Bureau of Economic Research (NBER)

Casey B. Mulligan

University of Chicago; National Bureau of Economic Research (NBER)

Tomas Philipson

University of Chicago; National Bureau of Economic Research (NBER)

Eric C. Sun

University of Chicago

Date Written: July 2008

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

Jena, Anupam B. and Mulligan, Casey B. and Philipson, Tomas J. and Sun, Eric C., The Value of Life in General Equilibrium (July 2008). NBER Working Paper No. w14157. Available at SSRN: https://ssrn.com/abstract=1161040

Anupam B. Jena

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-702-9017 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tomas J. Philipson

University of Chicago ( email )

Graduate School of Business
1101 East 58th Street
Chicago, 60637

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Eric C. Sun

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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