Final answer:
The value of life is primarily estimated based on labor market choices, product purchase decisions, and government policies, as well as considering jobs with varied risks and how personal lifestyle choices and healthcare spending influence health outcomes.
Step-by-step explanation:
The estimates of the 'value of life' rely primarily on a set of parameters including labor market choices, product purchase decisions, and government policies. Economists use various methods to quantify the value of life by observing how individuals behave in situations that involve risk to life. For instance, certain jobs have a higher probability of death and thus may offer higher wages to compensate for this risk. A notable example is the job of an ocean fisher compared to a fish farm worker, or ice trucking in Alaska versus truck driving in the contiguous United States.
Further complicating the valuation of life is the interplay between personal preferences and health expenditures. Lifestyle choices, such as diet, exercise, and smoking habits, mix with healthcare spending to influence outcomes like life expectancy, making it difficult to isolate the impact of each factor.