The option value of life

This paper argues that under conditions of uncertainty, there is frequently a positive option value to staying alive when compared to the alternative of dying right away. This value can make it prudentially rational for you to stay alive even if it appears highly unlikely that you have a bright future ahead of you. Drawing on the real options approach to investment analysis (see e.g. Dixit and Pindyck, 1994), the paper explores the conditions under which there is a positive option value to staying alive, and it draws out important implications for the problems of suicide and euthanasia.