Rates of time preference and valuations of the duration of life

W. Kip Viscusi; Michael J. Moore

doi:10.1016/0047-2727(89)90061-3

Rates of time preference and valuations of the duration of life

W. Kip Viscusi^*, Michael J. Moore

^*Corresponding author for this work

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Research output: Contribution to journal › Article › peer-review

114 Scopus citations

Abstract

This paper develops a multi-period Markov model of the lifetime choice of occupational fatality risks. The empirical model analyzes the wage effects of job risks using the 1982 University of Michigan Panel Study of Income Dynamics in conjunction with death statistics from the U.S. National Traumatic Occupational Fatality Survey. Evidence regarding workers' intertemporal choices with respect to risks with long-term implications is broadly consistent with rational behavior. Workers' implicit real rate of time preference with respect to future life years equals approximately 11 percent. This rate of time preference decreases with education.

Original language	English (US)
Pages (from-to)	297-317
Number of pages	21
Journal	Journal of Public Economics
Volume	38
Issue number	3
DOIs	https://doi.org/10.1016/0047-2727(89)90061-3
State	Published - Apr 1989

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/0047-2727(89)90061-3

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title = "Rates of time preference and valuations of the duration of life",

abstract = "This paper develops a multi-period Markov model of the lifetime choice of occupational fatality risks. The empirical model analyzes the wage effects of job risks using the 1982 University of Michigan Panel Study of Income Dynamics in conjunction with death statistics from the U.S. National Traumatic Occupational Fatality Survey. Evidence regarding workers' intertemporal choices with respect to risks with long-term implications is broadly consistent with rational behavior. Workers' implicit real rate of time preference with respect to future life years equals approximately 11 percent. This rate of time preference decreases with education.",

author = "Viscusi, {W. Kip} and Moore, {Michael J.}",

note = "Funding Information: *Preliminary versions of this paper were presented at the University of Chicago, Duke University, the University of Illinois, the U.S. Environmental Protection Agency, Northwestern University, and the Summer Meetings of the Labor Studies program of the National Bureau of Economic Research. Gregory M. Duncan, Robert Winkler, Gary Zarkin and two anonymous referees provided helpful comments. This research was supported in part by the endowment of the George G. Allen professorship and by the Fuqua School of Business. {\textquoteleft}See, for example, the reviews by Machina (1987) and Tversky and Kahneman (1986).",

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N2 - This paper develops a multi-period Markov model of the lifetime choice of occupational fatality risks. The empirical model analyzes the wage effects of job risks using the 1982 University of Michigan Panel Study of Income Dynamics in conjunction with death statistics from the U.S. National Traumatic Occupational Fatality Survey. Evidence regarding workers' intertemporal choices with respect to risks with long-term implications is broadly consistent with rational behavior. Workers' implicit real rate of time preference with respect to future life years equals approximately 11 percent. This rate of time preference decreases with education.

AB - This paper develops a multi-period Markov model of the lifetime choice of occupational fatality risks. The empirical model analyzes the wage effects of job risks using the 1982 University of Michigan Panel Study of Income Dynamics in conjunction with death statistics from the U.S. National Traumatic Occupational Fatality Survey. Evidence regarding workers' intertemporal choices with respect to risks with long-term implications is broadly consistent with rational behavior. Workers' implicit real rate of time preference with respect to future life years equals approximately 11 percent. This rate of time preference decreases with education.

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Rates of time preference and valuations of the duration of life

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