Probabilistic Value of Life vs. Deterministic Value of Time

This paper re-examines the standard probabilistic willingness-to-pay value of life model of Jones-Lee and others. A consumer decides on allocating his income between consumption, life insurance, and precaution | which a®ects his probability of survival in the one future period. One innovation of the paper is to assume a simple exponential utility function, and to solve the probabilistic value of life model analytically. I show that the standard probabilistic value of life measure has some strikingly bad features, including a strong negative connection with altruism. I then discuss an alternative to the probabilistic value of life model. The alternative is a certainty model, in which a consumer decides how much to spend to increase the certain length of his life. I argue that the certainty buying time model has many advantages over the probabilistic value of life model, that it avoids several problems and paradoxes associated with the probabilistic model, and that it is more consistent with our intuition.