Living Large or Long? Preference Estimates from Completed-Life Stories

Abstract

We estimate the marginal rate of substitution between longevity and lifetime income, a parameter that has relevance to policy questions in health care, climate policy, safety-regulation, innovation and tax-policy. We ask online respondents to choose between vignettes that describe completed life-stories, where longevity, income, and a variety of other aspects of lives are randomized, and find that the typical respondent is willing to tradeoff about 7% of average annual income to live 1% longer. In contrast to conventional value-of-statistical-life estimates, which are constrained to have the same substitution elasticities by age and income, we demonstrate meaningful heterogeneity in the MRS across respondents. We demonstrate that elicitation of the MRS from completed lives has several desirable properties, including being correlated with respondents stated attitudes about income and health, and not being sensitive to respondents misunderstanding low-probability events.