Harvard Kennedy School Harvard University

Search this site

Faculty Research Working Paper Series
Joseph Aldy
Associate Professor of Public Policy
phone: (617)496-7213
Heterogeneity in the Value of Life
Aldy, Joseph, and Seamus Smyth. "Heterogeneity in the Value of Life." HKS Faculty Research Working Paper Series RWP14-024, May 2014.
We develop a numerical life-cycle model with choice over consumption and leisure, stochastic mortality and labor income processes, and calibrated to U.S. data  to characterize willingness to pay (WTP) for mortality risk reduction. Our theoretical framework can explain many empirical findings in this literature, including an inverted-U life-cycle WTP and an order of magnitude difference in prime-aged adults WTP. By endogenizing leisure and employing multiple income measures, we reconcile the literature's large variation in estimated income elasticities. By accounting for gender- and race-specific stochastic mortality and income processes, we explain the literature's black-white and female-male differences.



Copyright © 2017 The President and Fellows of Harvard College