Risk Aversion and the Value of Risk to Life

Antoine Bommier and Bertrand Villeneuve
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Antoine Bommier: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique

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Abstract: The standard literature on the value of life relies on Yaari's (1965) model, which includes an implicit assumption of risk neutrality with respect to life duration. To overpass this limitation, we extend the theory to a simple variety of nonadditively separable preferences. The enlargement we propose is relevant for the evaluation of life-saving programs: current practice, we estimate, puts too little weight on mortality risk reduction of the young. Our correction exceeds in magnitude that introduced by the switch from the notion of number of lives saved to the notion of years of life saved.

Keywords: Lifecycle Behavior; Life Insurance; Value of Statistical Life; Cost-Benefit Analysis (search for similar items in EconPapers)
Date: 2012
Note: View the original document on HAL open archive server: https://hal.science/hal-01685924v1
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Citations: View citations in EconPapers (18)

Published in Journal of Risk and Insurance, 2012, 79 (1), ⟨10.1111/j.1539-6975.2010.01390.x⟩

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Related works:
Journal Article: Risk Aversion and the Value of Risk to Life (2012)
Working Paper: Risk Aversion and the Value of Risk to Life (2010)
Working Paper: Risk Aversion and the Value of Risk to Life (2008)
Working Paper: Risk Aversion and the Value of Risk to Life (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01685924

DOI: 10.1111/j.1539-6975.2010.01390.x

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