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Rate of time preference and the quantity adjusted value of life in India

Published online by Cambridge University Press:  02 October 2006

K. R. SHANMUGAM
K. R. SHANMUGAM
Affiliation:
Madras School of Economics, Chennai 600 025 (India). Tel: 044-2230 0304. Email: [email protected]; [email protected]
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Abstract

The choice of appropriate discount rate for comparing the long-term health benefits of policies is a complex issue. This study contributes to this sparsely researched issue from the perspective of developing countries by estimating the implicit discount rate that workers reveal through their willingness to incur death risks on-the-job and quantity-adjusted value of life of workers using an original data set from the Indian labor market. The estimated real discount rate ranges from 7.6 to 9.7 per cent, which is closer to the financial market rate for the study period and consistent with earlier studies from developed nations. The estimated value of life ranges are Rs. 24.3–26.5 (US $1.34–1.47) million. The results of the study can aid policy makers, international agencies, and researchers in evaluating health projects in India and other developing nations.

Type
Research Article
Information
Environment and Development Economics , Volume 11 , Issue 5 , October 2006 , pp. 569 - 583
Copyright
2006 Cambridge University Press

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