Preferences for life-expectancy gains: Sooner or later?

James Hammitt and Tuba Tunçel

Journal of Risk and Uncertainty, 2015, vol. 51, issue 1, 79-101

Abstract: We assess individuals’ preferences for time paths of reductions in mortality risk yielding a life-expectancy gain of about 1 month. In a survey of more than 1000 French residents, we find substantial coherence and heterogeneity. We elicit pairwise preferences between three perturbations of age- and gender-specific survival curves: transient (reduce hazard for next 10 years), additive (reduce hazard in all future years by subtracting a constant), and proportional (reduce hazard in all future years by a common fraction). The preference order implied by these pairwise responses is transitive for 85% of respondents. The most common preference orders, accounting for more than half the respondents, are strict indifference, proportional ≻ additive ≻ transient, and the inverse of that ranking. These are consistent with globally risk-neutral, risk-seeking, and risk-averse preferences toward longevity, respectively. Choices between one of these scenarios and a latent version that provides no risk reduction for the first 10 or 20 years are consistent with these risk postures. The mean and median consumption-discount rates are 12 and 5% per year, respectively, and the average coefficient of relative risk aversion with respect to financial gambles is about 0.5. Preferences toward the time path of mortality-risk reduction are not strongly associated with individual characteristics, although respondents who are older or exhibit higher consumption-discount rates tend to exhibit less longevity-risk aversion. Copyright Springer Science+Business Media New York 2015

Keywords: Survival; Mortality risk; Risk aversion; Value of statistical life; D6; J17 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s11166-015-9217-4

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