Quality of Life and the WTP for an Increased Life Expectancy at an Advanced Age

Posted: 5 May 1998

See all articles by Magnus Johannesson

Magnus Johannesson

Stockholm School of Economics - Department of Economics

Per-Olov Johansson

Stockholm School of Economics

Date Written: Undated

Abstract

In this study we report an attempt to measure the value adult Swedes impute to an increased survival probability at high ages. A rating scale between the worst possible quality of life (=3D1) and the best possible quality of life (=3D10) is used to indicate the quality of life a person expects to achieve at an advanced age. We find a highly significant correlation between this quality measure and the insurance premium a person is willing to pay in exchange for a programme increasing the expected length of life by one year, conditional on having survived until the age of 75 years. The (maximum) insurance premium the average person is willing to pay for such a programme is less than $1,500. The willingness to pay seems to increase with a person's age, but at a low rate. The implied average marginal rate of time preference is in the range 0.5-1.5 percent.

JEL Classification: D61, D91, H51, I10, I12

Suggested Citation

Johanneson, Magnus and Johansson, Per-Olov, Quality of Life and the WTP for an Increased Life Expectancy at an Advanced Age (Undated). Available at SSRN: https://ssrn.com/abstract=4984

Magnus Johanneson

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9443 (Phone)

HOME PAGE: http://www.hhs.se/Faculty/showperson.htm?personid=198

Per-Olov Johansson (Contact Author)

Stockholm School of Economics ( email )

P.O. Box 6501
Stockholm
SWEDEN
+46 8 736 92 82 (Phone)
+46 8 30 21 15 (Fax)

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