On the value of changes in life expectancy: Blips versus parametric changes

We estimate the value of a 'blip', i.e. an immediate small reduction, in the hazard rate for a random sample of Swedes. Since the risk reduction is age-independent (2 'extra saved lives' out of 10,000 during the next year), we can examine how the value of a statistical life varies with age. We also show how blip data can be used to obtain a lower bound for the value of a permanent change in an individual's hazard rate. The value of a life exhibits an inverted-U shape with respect to age, peaking at the age of 40, and lies within the $3 to $7 million interval where most reasonable estimates are clustered according to Viscusi's (1992) survey.