Age, Time, and the Measurement of Mortality Benefits
Several analytical procedures can be used to place dollar values on the benefits of policies that reduce mortality. This report examines the sensitivity of such measures to age, time, and information effects. It derives benefits measures from a formal model of individual lifetime consumption decisions and applies them to several cases of policy interest. The author derives a number of policy recommendations from the research reported here: (1) base benefits assessments on full lifetable comparisons; (2) reexamine clinical and laboratory data in a way that permits economically meaningful risk assessment; (3) undertake ancillary studies of individual risk preference and time consistency; (4) avoid the use of human-capital or value-of-life measures whenever possible; and (5) take careful account of the timing and distribution of information when choosing policy options and measuring benefits.
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VALUATION OF CHANGES IN RISK
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aggregate WTP analysis annuity measure Arc elasticity asbestos in schools aspects of mortality assumptions Averse Consistent Imperfect behavior benefits measures blood pressure causes of death change in lifetables changes in risk cohorts comparative statics compensating surplus computer model consumption path contingent valuation deaths avoided decreases discount rate dose dose-response relation Economic equivalent surplus excess risk factor expected utility exposure level future income hazards human capital measure individual's interest rate IVOL latency period lead in gasoline levels of exposure lifetable adjuster lifetime lung cancer main menu measured benefits mesothelioma mortality benefits occupational asbestos optimization option output parameters Pareto criterion Pareto principle percent perfect markets policy change policy date policy situations probability of death procedure reduce reference position reflect reoptimize Return to main risk assessment risk aversion risk model Robinson Crusoe scenario sensitive studies Table time-consistent tion understates value-of-life variable willingness to pay WTP measures