The recipients of the 2013 Witt Award are Antonie Bommier from ETH-Zurich, and Bertrand Villeneuve From Universite Paris-Dauphine and CREST (Laboratoire de Finance Assurance) for “Risk Aversion and the Value of Risk to Life”, JRI March 2012, Vol. 79 #1, pp. 77-103.
The standard literature on the value of life relies on Yaari’s 1965 model, which includes an implicit assumption of risk neutrality with respect to life duration. To overpass this limitation, we extend the theory to a simple variety of preferences that are not necessarily additively separable. The enlargement we propose is relevant for the evaluation of life-saving programs: current practice, we estimate, puts too little weight on mortality risk reduction of the young. Our correction exceeds in magnitude that introduced by the switch from the notion of number of lives saved to the notion of years of life saved.