Uncertain lifetime, life protection, and the value of life saving.

The analytic innovation is treating life's end as uncertain, and life expectancy as partly the product of individuals' efforts to self-protect against mortality and morbidity risks. The demand for self-protection is modeled in a stochastic, life-cycle framework under alternative insurance options. The model helps explain the trend and systematic diversity in life expectancies across different population groups, as well as the wide variability in reported "value of life saving" estimates. The analysis yields a closed-form solution for individuals' value of life saving that is estimable empirically. It reflects the impacts of specific personal characteristics and alternative insurance options on both life expectancy and its valuation.