Abstract
This paper reports the results of a study of the cigarette market designed to measure what consumers are willing to pay for increased life expectancy. The spread of information on the health effects of smoking has dramatically transformed the cigarette market in the last 30 years. Using survey evidence on consumer beliefs together with reductions in cigarette demand gives a direct estimate of consumers’ valuation of safety. The average “value of life” is estimated to be $460,000 (1985$), but consumers are found to differ considerably in their valuations. Moreover, there appears to be a skewness to the value of life distribution; the median value of life is approximately $380,000, compared to the mean of $460,000.
The views expressed in this paper are those of the author and do not necessarily reflect the positions of the Federal Trade Commission or of any individual Commissioner. I am indebted to Gerard Butters, Richard Ippolito and Paul Portney for helpful comments on an earlier draft.
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© 1987 Springer Science+Business Media New York
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Ippolito, P.M. (1987). The Value of Life Saving: Lessons from the Cigarette Market. In: Lave, L.B. (eds) Risk Assessment and Management. Advances in Risk Analysis, vol 5. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-6443-7_43
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DOI: https://doi.org/10.1007/978-1-4757-6443-7_43
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