Abstract
Examination of estimates of the income elasticity of the value of a statistical life based on international stated preference studies yields an average between 0.94 and 1.05 overall and 0.65 and 0.80 after controlling for covariates. Quantile regression estimates indicate that the income elasticity is about 0.55 for more affluent countries and 1.0 for lower income nations, i.e., those countries that have estimates of the value of a statistical life below $2 million or per capita income levels below $3212. The estimates distinguish the values of the income elasticity across country either by income level or by the value of a statistical life. These elasticities are similar to those found in revealed preference labor market studies. The estimates are robust, controlling for possible sample selection bias and the influence of covariates, such as the type of risk.
Highlights
Transferring the value of a statistical life (VSL) from one nation to another is critical in valuing mortality risk reduction benefits in benefit-cost analyses for countries that lack reliable domestic VSL estimates
In our specifications most appropriate for use in benefit transfer, we find that VSLs above $2 million have an income elasticity of 0.85
Our results demonstrate that the income elasticity decreases over the distribution of VSLs
Summary
Transferring the value of a statistical life (VSL) from one nation to another is critical in valuing mortality risk reduction benefits in benefit-cost analyses for countries that lack reliable domestic VSL estimates. This article presents a meta-analysis of stated preference estimates of the VSL to analyze the variation in the income elasticity across countries, demonstrating that the income elasticity of the VSL is approximately 1.0 for all countries with VSLs lower than $2 million and approximately 0.55 for all countries with VSLs greater than $2 million.. We augment our base sample with 208 observations from nine stated preference studies presented in Robinson et al (2018), which gathered stated preference articles on the VSL in low and middle income countries. These low income country estimates expand our ability to explore the difference in elasticities between high income and low income economies. Using our recommendations to transfer VSLs to lower income economies generally results in higher VSLs than those currently adopted for policy purposes; the effect is largest for the lowest income economies
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