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

No 85:
Quality of Life and the WTP for an Increased Life Expectancy at an Advanced Age

Magnus Johannesson () and Per-Olov Johansson ()

Abstract: In this study we report an attempt to measure the value adult Swedes impute to an increased survival probability at high ages. A rating scale between the worst possible quality of life (=1) and the best possible quality of life (=10) is used to indicate the quality of life a person expects to achieve at an advanced age. We find a highly significant correlation between this quality measure and the insurance premium a person is willing to pay in exchange for a programme increasing the expected lengt of life by one year, conditional on having survived until the age of 75 years. The (maximum) insurance premium the average person is willing to pay for such a progrtamme is less than $1,500. The willingness to pay seems to increase with a person's age, but at a low rate. The implied average marginal rate of time preference is in the range 0.5-1.5 percent.

Keywords: Expected length of life; time preference; insurance; willingness to pay; (follow links to similar papers)

JEL-Codes: D61; D91; H51; I10; I12; (follow links to similar papers)

16 pages, November 1995

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This paper is published as:
Johannesson, Magnus and Per-Olof Johansson, (1997), 'Quality of Life and the WTP for an Increased Life Expectancy at an Advanced Age', Journal of Public Economics, Vol. 65, August, No. 2, pages 219-228

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