Abstract
This paper estimates the value of a statistical life from commercial Himalayan expeditions. Because deaths occur with a fair amount of regularity, fatality rates are calculated for each mountain trail and are, hence, disaggregated measures of risk. Also, since the marginal product of labor in the industry is (in part) the marginal product of safety, our revenue measures may account for unobserved safety-related productivity of guides. Guide safety is explicitly observed by market participants, and is reflected in higher wages for safer guides. Our VSL estimates are about $5 M.
Highlights
Society may face choices that involve a tradeoff between physical risk and pecuniary returns, and our decisions reveal our willingness to trade money for the risk of physical harm (Ashenfelter, 2006)
We believe that any error we may have induced in the process is random, so our regression estimates should not be biased. (Besides it is widely held that measurement error in a dependent variable is fairly innocuous in a regression context.) We believe that ours is the first study to use archived internet data for the purposes of regression analysis, and it is interesting to speculate how the Wayback machine might be used in subsequent research
Summary
Society may face choices that involve a tradeoff between physical risk and pecuniary returns, and our decisions reveal our willingness to trade money for the risk of physical harm (Ashenfelter, 2006). Econometric estimates of the VSL are used for understanding and informing public policies where risk/reward tradeoffs are important (Kniesner et al, 2006). There is an extremely rich literature on estimating the VSL, and we will not do it justice here. Modern treatments are Thaler and Rosen (1976) and Viscusi (1978). Recent papers are Ashenfelter (2006), Ashenfelter and Greenstone (2004), Kniesner et al (2006), Kniesner et al (2010), Schnier et al (2009), and Viscusi (2009), to name a few
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