Current research

St-Amour, Pascal (2023) “Valuing Life over the Life Cycle”, HEC Lausanne, University of Lausanne (paper) R&R, The Journal of Health Economics

  • Abstract:

    Adjusting life valuations along the along the (i) person-specific (age, health, labour income, wealth, preferences) and (ii) mortality risk-specific (beneficial vs detrimental, temporary vs permanent changes) dimensions is non-trivial, but often necessary for policy purposes. This paper characterizes these adjustments by analytically solving a quantitative life cycle model of consumption, leisure and health choices and the associated Hicksian variations for changes in survival. The calibrated model yields plausible out-of-sample life measures with Values of Life Year estimates between 154K$ and 200K$ and a Value of Statistical Life close to 6.0M$. The willingness to pay and to accept compensation are symmetric for one-shot beneficial vs detrimental changes in mortality risk, but asymmetric for permanent, as well as for longevity changes with larger willingness in the gains relative to loss domain and larger selling relative to buying prices. Ageing lowers both the value of and responsiveness to given changes in survival risk via falling resources and health, marginal continuation utility of living and lower longevity returns of survival changes.

Michaud, Pierre-Carl and Pascal St-Amour (2023), “Longevity, Health and Housing Risks Management in Retirement”, NBER Working Paper w31038. current version (paper)

  • Abstract:

    Annuities, long-term care insurance and reverse mortgages remain unpopular products to manage longevity, medical and housing price risks after retirement. We analyze the reasons for low demand using a life-cycle model structurally estimated with a unique stated-preference survey experiment of Canadian households. Low risk aversion, substitution between housing and consumption and low marginal utility when in poor health explain most of the limited demand. Bequests motives are found to be a luxury good and play a restricted role. The remaining disinterest is explained by information frictions and behavioural status-quo biases. We find evidence of strong spousal co-insurance motives motivating LTCI and of responsiveness to bundled products with a near doubling of demand for annuities when reverse mortgages can be used to annuitize home equity.