Health risk and the value of life

Daniel Bauer, Darius Lakdawalla and Julian Reif

Journal of Public Economics, 2025, vol. 245, issue C

Abstract: We extend the conventional life-cycle framework for valuing health and longevity improvements to a stochastic setting with multiple health states and apply it to data on mortality, quality of life, labor earnings, and medical spending for adults with different comorbidities. We find that sick adults are willing to pay nearly twice as much per quality-adjusted life-year (QALY) to reduce mortality risk as healthy adults, and that reducing the risk of serious illness is valued similarly to reducing the risk of mild illness. Our results provide a rational explanation for why people oppose a single threshold value for rationing care and why they invest less in prevention than in treatment.

Keywords: Value of life; Health behavior; Prevention; Quality-adjusted life-year (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:245:y:2025:i:c:s0047272725000441

DOI: 10.1016/j.jpubeco.2025.105346

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