The economics of risks to life

Abstract

The article studies the ways in which changes in the mortality age pattern modify the social well-being of a representative person over their life cycle. It develops a neoclassical, age-specific model of the economy and population. It then derives a formula that relates the expected lifetime welfare of a person born at a certain time to the survival probabilities at different ages, the consumption rate at different ages, the labor participation rate at different ages, and the growth rate of the economy and population. It also proves that the value of a specific age-related variation in mortality risks is given by the sum of the expected utility gain from extra years of life, the expected utility gain from extra years of productive work, and the expected utility gain from extra children, minus the cost of the extra consumption support needed. – AI-generated abstract.