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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 51:
On the Value of Changes in Life Expectancy

Per-Olov Johansson ()

Abstract: In this note the value of parametric changes in hazard rates is analyzed. Two different kinds of changes, sudden or 'blip' changes and persistent changes, respectively, are considered within a model in which both the marginal rate of time preference and the survival probability are age-dependent. Numerical simulations are used to illustrate the fact that the magnitude of the pure time preference determines the age- profile of the value of parametric changes in the survival probability. The value of such changes is decreasing or increasing in age depending on the magnitude of the time preference.

Keywords: Comparative dynamics; risk; age-dependency; (follow links to similar papers)

JEL-Codes: I10; D61; D81; C61; (follow links to similar papers)

21 pages, April 1995

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This paper is published as:
Johansson, Per-Olov, (1996), 'On the Value of Changes in Life Expectancy', Journal of Health Economics, Vol. 15, pages 105-113



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