Erzo F.P. Luttmer, Dartmouth University

Living large or long: preference estimates from completed-life stories

Abstract:

The value people attach to longevity increases is an important input to policy decisions on health care, the environment, and safety regulations. This value is typically estimated based on compensating differentials for taking on very small risks of death. We instead estimate this value by letting people choose between vignettes in which life-time income and longevity is randomized. We present a battery of tests to gauge whether these hypothetical choices measure underlying preferences. The benefit of our method is that it yields estimates of the distribution of preferences for longevity in a representative population, allows for a characterization of heterogeneity in preferences by respondent characteristics, but does not require people to correctly evaluate very small probabilities.

Erzo F.P. Luttmer is the Dartmouth Professor in Economics at Dartmouth College. He is a Research Associate at the National Bureau of Economic Research, a Research Fellow at IZA, and Editor at the Journal of Public Economics. From 1999 to 2000, he worked as an economist at the World Bank. Luttmer received a Master's degree in econometrics from Erasmus University Rotterdam and holds a PhD in economics from Harvard University. He serves as the editor of the American Economic Review.

His research interests include public economics, labor economics, and applied econometrics. Within these fields, his research focuses on income redistribution programs, the role of social effects on economic outcomes, and the effects of limits to cognition in social insurance.

Luttmer’s research seeks to understand what drives the demand for redistribution and social insurance and how the implementation of redistribution and social insurance programs can be improved. Many of his papers highlight the important role of social effects in economic behavior. Much of his more recent research explores the role of cognitive limitations on demand for and design of social insurance programs.

You can read more about Erzo Luttmer here

CEBI contact: Kristoffer Balle Hvidberg