Measuring How Risk Tradeoffs Adjust with Income
38 Pages Posted: 28 Sep 2009 Last revised: 3 Jul 2023
There are 2 versions of this paper
Measuring How Risk Tradeoffs Adjust with Income
Date Written: September 2009
Abstract
Efforts to reconcile inconsistencies between theory and estimates of the income elasticity of the value of a statistical life (IEVSL) overlook important restrictions implied by a more complete description of the individual choice problem. We develop a more general model of the IEVSL that reconciles some of the observed discrepancies. Our framework describes how exogenous income shocks, such as unexpected medical expenditures, may affect labor supply decisions which in turn influence both the coefficient of relative risk aversion and the IEVSL. The presence of a consumption commitment, such as a home mortgage, also alters this labor supply adjustment. We use data from the Health and Retirement Study to explore the responsiveness of labor force exit decisions to spousal health shocks and the role of a home mortgage as a constraint on this response.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Value of a Statistical Life: Evidence from Panel Data
By Thomas J. Kniesner, W. Kip Viscusi, ...
-
The Value of a Statistical Life: Evidence from Panel Data
By Thomas J. Kniesner, W. Kip Viscusi, ...
-
By Thomas J. Kniesner, W. Kip Viscusi, ...
-
By Thomas J. Kniesner, W. Kip Viscusi, ...
-
By Thomas J. Kniesner, W. Kip Viscusi, ...
-
Measuring How Risk Tradeoffs Adjust with Income
By Mary F. Evans and V. Kerry Smith
-
The Value of Life in General Equilibrium
By Anupam B. Jena, Casey B. Mulligan, ...
-
By Mary F. Evans and V. Kerry Smith
-
The Heterogeneity of the Value of Statistical Life: Introduction and Overview
-
Using Job Changes to Evaluate the Bias of the Value of a Statistical Life
By Hannes Spengler and Sandra Schaffner