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

Abstract

We estimate the marginal rate of substitution elasticity between longevity and lifetime income, a parameter that has relevance to policy questions in healthcare, climate policy, safety-regulation, 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 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 large heterogeneity in the MRS elasticity across respondents, but relatively less variation along conventionally measured demographic variables. 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.