Center for Tobacco Control Research and Education

Abstract

Objectives. This paper describes the methodology for estimating the present value of lifetime earnings (PVLE) for the year 2000.

Methods. Estimation takes into account life expectancy by gender and age group, percent of people in the labor force or keeping house, current pattern of earnings at successive ages, an imputed value for household production, and the discount rate.

Results. At a discount rate of 3 percent, males and females aged 20-24 have the highest PVLE — $1,517,045 and $1,085,188 respectively. Lifetime earnings for men are higher than for women. Higher discount rates yield lower values at all ages.

Conclusions. The present value of lifetime earnings yields useful estimates of the valueof life. These estimates are conservative compared with other approaches.