@article{111d756ad4de45b5b3f46b58fd7b75d3,
title = "Health risk and the value of life",
abstract = "We extend the conventional life-cycle framework for valuing health and longevity improvements to a stochastic setting with multiple health states and apply it to data on mortality, quality of life, labor earnings, and medical spending for adults with different comorbidities. We find that sick adults are willing to pay nearly twice as much per quality-adjusted life-year (QALY) to reduce mortality risk as healthy adults, and that reducing the risk of serious illness is valued similarly to reducing the risk of mild illness. Our results provide a rational explanation for why people oppose a single threshold value for rationing care and why they invest less in prevention than in treatment.",
keywords = "Health behavior, Prevention, Quality-adjusted life-year, Value of life",
author = "Daniel Bauer and Darius Lakdawalla and Julian Reif",
note = "We are grateful to Dan Bernhardt, Tatyana Deryugina, Don Fullerton, Sonia Jaffe, Ian McCarthy, Nolan Miller, Alex Muermann, George Pennacchi, Mark Shepard, Dan Silverman, Justin Sydnor, George Zanjani, and participants at the AEA/ARIA meeting, the NBER Insurance Program Meeting, the Risk Theory Society Annual Seminar, Temple University, the Toulouse School of Economics, the University of Chicago Applications Workshop, the University of Miami, and the University of Wisconsin-Madison for helpful comments. We are also grateful to Bryan Tysinger for assistance with the Future Elderly Model. Bauer acknowledges financial support from the Society of Actuaries. Lakdawalla acknowledges financial support from the National Institute on Aging, United States (1R01AG062277). We are grateful to Dan Bernhardt, Tatyana Deryugina, Don Fullerton, Sonia Jaffe, Ian McCarthy, Nolan Miller, Alex Muermann, George Pennacchi, Mark Shepard, Dan Silverman, Justin Sydnor, George Zanjani, and participants at the AEA/ARIA meeting, the NBER Insurance Program Meeting, the Risk Theory Society Annual Seminar, Temple University, the Toulouse School of Economics, the University of Chicago Applications Workshop, the University of Miami, and the University of Wisconsin-Madison for helpful comments. We are also grateful to Bryan Tysinger for assistance with the Future Elderly Model. Bauer acknowledges financial support from the Society of Actuaries. Lakdawalla acknowledges financial support from the National Institute on Aging ( 1R01AG062277 ). Lakdawalla discloses that he is an investor in Precision Medicine Group, along with a co-founder and Chief Scientific Officer of EntityRisk, and that he has in the past two years served as a consultant to Amgen, Genentech, Gilead, GRAIL, Mylan, Perrigo, and Pfizer.",
year = "2025",
month = may,
doi = "10.1016/j.jpubeco.2025.105346",
language = "English (US)",
volume = "245",
journal = "Journal of Public Economics",
issn = "0047-2727",
publisher = "Elsevier B.V.",
}