Preferences for life-expectancy gains: Sooner or later?
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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.
KeywordsSurvival Mortality risk Risk aversion Value of statistical life
JEL ClassificationsD6 J17
We thank Mike Jones-Lee, Sue Chilton, Jytte Nielsen, Kip Viscusi, Rebecca McDonald, Henrik Andersson and other participants at the April 2014 “Event in Honour of Emeritus Professor Michael W. Jones-Lee” and an anonymous referee for helpful comments. For help with survey design, we thank Pierre Dubois, Christoph Rheinberger, Astrid Hopfensitz, Yann Kervinio, Ananya Sen, and 11 TSE doctoral students who served as pretest respondents. Hammitt acknowledges financial support from INRA (the French National Institute for Agricultural Research, which also supported data collection), the European Research Council under the European Community’s Seventh Framework Programme (FP7/2007–2013) Grant Agreement no. 230589, and the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. Tunçel acknowledges financial support from ECOCEP (Economic Modeling for Climate-Energy Policy).
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