The Discount Rate and the Value of Remaining Years of Life

John M. Hartwick

No 1191, Working Papers from Queen's University, Department of Economics

Abstract: We back out an estimate of a personal discount rate of between 3 and 4 percent for a person with a life expectancy of 74 years who dies at age 30 (or 40) and has a value of statistical life of $6.3 million. Central to these calculations is the series generated by Murphy and Topel of value of life years (the dollar value of consumption plus the dollar value of leisure, with some smoothing for income in retirement). We employ the Makeham "model" of life expectancy in our calculations.

Keywords: Discount rate; Value of life (search for similar items in EconPapers)
JEL-codes: J12 J12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-hea
Date: 2008-11
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