Consumer affairs and the valuation of safety

Abstract

An appraisal of past work on the value of a statistical life has been conducted for the purpose of assisting decisions in the consumer safety sector. Although contingent valuation is nowadays often cited as the preferred approach for valuing the dominant, human cost, element of safety, a range of other valuation techniques is recognised and used, both in Britain and elsewhere. It is argued that all valuation techniques entail considerable uncertainty for a variety of reasons, some methodological and some attributable to the fact that the value of safety is an ill-defined and fuzzy concept for the individual. In view of this, plus the need to appeal to a diverse constituency, it is proposed that the value of consumer safety be based upon a broad appreciation of the outcomes from the various techniques which exist, rather than pinning all hopes upon any single methodology. Furthermore, in the interests of sound consumer risk management practice and public credibility, it is recommended that uncertainty be openly acknowledged by expressing the value of safety as a range rather than a point value. The range proposed is from £1 million to £10 million, with the expectation that for most consumer applications values used might lie within a narrower bandwidth from about £2 million to £4 million. It is suggested that the specification of a range, while not everyone’s nor every sector’s preferred approach, nonetheless has a number of useful attributes. These include endowing decision makers with a degree of flexibility in arriving at safety decisions, considered to be an important issue within the consumer safety sphere where complex contextual factors frequently arise, and which are arguably best handled by a thoughtful and sensitive approach and negotiation, rather than by the application of any more formulaic recipe.