VAluing Life as an Asset, as a Statistic, and at Gunpoint. Issue 643 (17th September 2021)

• Record Type: Journal Article
• Authors: Hugonnier, Julien; Pelgrin, Florian; St-Amour, Pascal
• Is Part Of: Economic journal. Volume 132:Issue 643(2022)
• Page Start: 1095
• Page End: 1122
• Publication Date: 2021-09-17
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; 330.05
• DOI: 10.1093/ej/ueab072
• Languages: English
• ISSNs: 0013-0133

Abstract

Abstract: Rationalising the stark differences between the human capital and the statistical values of a human life is complicated by the absence of common foundations. We solve a human capital investment model with longevity risk to characterise the human capital. The associated indirect utility yields the willingness to pay against mortality; the marginal willingness to pay solves the value of a statistical life. Indifference between life and certain death characterises the limiting willingness to pay and provides a gunpoint value. A structural estimation reveals similar human capital (${\$}$ 300, 000) and gunpoint value (${\$}$ 251, 000) and explains a much larger statistical value (${\$}$ 4.98 million) by a strongly concave willingness to pay.