The Value of Statistical Life for Seniors
Working Paper 33165
DOI 10.3386/w33165
Issue Date
We develop a new revealed preference framework to estimate the value of statistical life (VSL). Our framework starts from a hedonic model of health care in which heterogenous individuals choose how much to spend on medical services that reduce mortality risk. Their choices generate an equilibrium survival function that can be differentiated to recover their marginal willingness to pay for mortality risk reduction. Our IV estimator uses survey data on Americans over age 66, linked to their federal administrative records. The mean VSL is approximately $1 million at age 67 and increasing in health, income, education, and life expectancy.