Question

If a person were willing to pay $20 to reduce her risk of dying from 12/100,000 to 6/100,000, what is her implied value of life? (Economics/math)

Answer 1

Not sure, but what makes sense to me is the following:\[\frac{$20}{\frac{6}{100000}}=$333, 333\]for value of life.

Answer 2

My reasoning:
\[V=\frac{price $}{risk}\]If your chance of dying was 100%, your value of life would simply be the price payed for the policy, because the denominator is 1. This makes perfect sense. As you risk of dying decreases, the value of life increases as we expect. If your chance of dying were reduced to 1/infinity, in the most extreme case, your value of life would be infinity as we expect. Going the other way, as your chance of dying increases, your value of life decreases as expected.

Answer 3

$40.

Answer 4

interesting...never thought of it like that but that makes sense. reduce risk by 1/2...double value paid for implied value of life.

Answer 5

$20 to HALF the chances of dying. Therefore $20x2=$40.
Seems a bit tight!

Answer 6

Bit of an existential question, you could say that the value of life increases the more likely you are to die, but as you cant quantify that and its a maths question I reckon its $40. Although I could be wrong.....

Answer 7

Its an economics question too though (as stated in the OP) and i assure you economists would quantify life like that. They would say something like the utility of life increase as likly hood of death increases.