Value Of A Statistical Life Estimates Research Articles

Anchoring Biases in International Estimates of the Value of a Statistical Life

U.S. labor market estimates of the value of a statistical life (VSL) were the first revealed preference estimates of the VSL in the literature and continue to constitute the majority of such market estimates. The VSL estimates in U.S. studies consequently may have established a reference point for the estimates that researchers analyzing data from other countries are willing to report and that journals are willing to publish. This article presents the first comparison of the publication selection biases in U.S. and international estimates using a sample of 68 VSL studies with over 1,000 VSL estimates throughout the world. Publication selection biases vary across the VSL distribution and are greater for the larger VSL estimates. The estimates of publication selection biases distinguish between U.S. and international studies as well as between government and non-government data sources. Empirical estimates that correct for the impact of these biases reduce the VSL estimates, particularly for studies based on international data. This pattern of publication bias effects is consistent with international studies relying on U.S. estimates as an anchor for the levels of reasonable estimates. U.S. estimates based on the Census of Fatal Occupational Injuries constitute the only major set of VSL studies for which there is no evidence of statistically significant publication selection effects. Adjusting a baseline bias-adjusted U.S. VSL estimate of $9.6 million using estimates of the income elasticity of the VSL may be a sounder approach to generating international estimates of the VSL than relying on direct estimates from international studies.

Mortality-risk valuation, age and cause of death: out-of-hospital cardiac arrest

Economic evaluation of policies regarding out-of-hospital cardiac arrest (OHCA) is important. The value of a statistical life (VSL) for OHCA victims is the most important component in a cost-benefit analysis of interventions that have the possibility to reduce mortality from this cause. This value is not known. We use responses to a national Swedish mail survey, based on the stated-preference technique to directly elicit individuals’ hypothetical willingness to pay for a reduced risk of dying from OHCA. A lower-bound estimate of VSL for OHCA would be in range of SEK 30 to 50 million. The value is found to be higher than for comparable VSL estimates from the transport sector, even though individuals who suffer OHCAs are generally older and less healthy than people who die in road traffic accidents. The results indicate that it is not an overestimation to use the ‘baseline’ VSL value from the transport sector (SEK 24 million) in cost-benefit analysis of OHCA policy decisions and that the cause of death is important when examining willingness to pay for death risk reductions. We do not support a general declining VSL due to the age of the victims, i.e. a ‘senior death discount’, for this cause of death.Published: Online January 2017. In print December 2017.

VP95 The Monetary Value Of A Statistical Life Year: A Systematic Review

INTRODUCTION:Among economists, there is widespread agreement that the monetary valuation of health gains should reflect the preferences of those who will be affected by resource allocation decisions. In the context of Health Technology Assessments (HTAs), this view implies a need for reliable empirical estimates of the value of statistical life year (VSLY), which should provide a useful point of reference for cost benefit analyses.METHODS:We conducted a systematic review of the literature on the economic value of a statistical life (VSL). We searched in the EconBiz and EconLit databases for studies, which reported VSL estimates based on original research and were published between 1995 and 2015. We classified studies by methodology, that is, revealed preference (RP) or stated preference (SP; that is, CV, contingent valuation, or DCE (discrete choice experiment) approach, and by regional origin of data. We transformed VSL estimates into VSLY expressed in year 2014 Euros, using life expectancy tables for the populations studied, a real discount rate of 3 percent, national Consumer Price Indices for inflating, and purchasing power parities for currency conversion. In addition, we calculated ratios of VSLY to gross domestic product (GDP) per capita.RESULTS:Our search yielded 120 studies appropriate for inclusion. From these, we extracted a total of 132 VSL estimates (RP, n = 60; SP, n = 72). The median VSLY was 6.4 times GDP/capita. Transformed into Euro (2014), the median VSLY was EUR165,000 (mean, EUR217,000). We found significant differences by regional source of data (North American, median EUR272,000; European, EUR158,000) and by method (RP, EUR241,000; SP: CV, EUR117,000; DCE, EUR187,000). VSLY estimates were sensitive to discount rate.CONCLUSIONS:Our data indicate that VSLY estimates based on empirical data exceed benchmarks commonly used in the context of HTAs. However, inter-study variability, methodological limitations, and normative considerations, all suggest to exercise caution before translating this observation into actual policy.

Income Elasticities and Global Values of a Statistical Life

Countries throughout the world use estimates of the value of a statistical life (VSL) to monetize fatality risks in benefit-cost analyses. However, the vast majority of countries lack reliable revealed preference or stated preference estimates of the VSL. This article proposes that the best way to calculate a population-average VSL for countries with insufficient or unreliable data is to transfer a base VSL from the United States calculated using labor market estimates from Census of Fatal Occupational Injuries data, coupled with adjustments for differences in income between the United States and the country of interest. This approach requires estimation of two critical inputs: a base U.S. VSL and the income elasticity of the VSL. Drawing upon previous meta-analyses that include adjustments for publication selection biases, we adopt a base VSL of $9.6 million. We utilize a sample of 953 VSL estimates from 68 labor market studies of the VSL covering fourteen lower-middle income to high income nations. We estimate the income elasticity of the VSL within the United States to be from 0.5 to 0.7 and to be just above 1.0 for non-U.S. countries. Quantile regression reveals that much of the disparity in income elasticities is attributable to income differences between the United States and other countries, as the income elasticity increases for lower income populations. Using income classifications from the World Bank, we calculate average VSLs in lower income, lower-middle income, upper-middle income, and upper income countries to be $107,000, $420,000, $1.2 million, and $6.4 million, respectively. We also present VSL estimates for all 189 countries for which World Bank income data are available, yielding a VSL range from $45,000 to $18.3 million.

The value of a statistical life for transportation regulations: A test of the benefits transfer methodology

Policy applications of the value of a statistical life (VSL) often make a benefits transfer assumption that the VSL from one market context is broadly applicable to other contexts. The U.S. Department of Transportation’s estimate of $9.2 million is based on labor market estimates of VSL. This article examines whether there are any significant differences in labor market estimates of the VSL by the nature of the fatality, utilizing two different approaches that distinguish between fatalities resulting from transportation events and vehicle-related sources based on the Census of Fatal Occupational Injuries (CFOI) data. The labor market estimates of VSL generalize across transport and non-transport contexts so that it is appropriate to use labor market estimates of VSL to value the benefits of transport regulations. This result holds even after accounting for the level and composition of nonfatal job injuries.

Willingness to accept equals willingness to pay for labor market estimates of the value of a statistical life

Our research clarifies the conceptual linkages among willingness to pay for additional safety, willingness to accept less safety, and the value of a statistical life (VSL). We present econometric estimates using panel data to analyze the VSL levels associated with job changes that may affect the worker’s exposure to fatal injury risks. Our baseline VSL estimates are $7.7 million and $8.3 million (Y$2001). There is no statistically significant divergence between willingness-to-accept VSL estimates associated with wage increases for greater risks and willingness-to-pay VSL estimates as reflected in wage changes for decreases in risk. Our focal result contrasts with the literature documenting a considerable asymmetry in tradeoff rates for increases and decreases in risk. An important implication for policy is that it is reasonable to use labor market estimates of VSL as a measure of the willingness to pay for additional safety.

The Role of Publication Selection Bias in Estimates of the Value of a Statistical Life

Meta-regression estimates of the value of a statistical life (VSL) controlling for publication selection bias often yield bias-corrected estimates of VSL that are substantially below the mean VSL e...

Risky Transportation Choices and the Value of a Statistical Life

This paper exploits an unusual transportation setting to generate some of the first revealed preference value of a statistical life (VSL) estimates from a low-income setting. We estimate the trade-offs individuals are willing to make between mortality risk and cost as they travel to and from the international airport in Sierra Leone. The setting and original dataset allow us to address some typical omitted variable concerns, and also to compare VSL estimates for travelers from different countries, all facing the same choice situation. The average VSL estimate for African travelers in the sample is US$577,000 compared to US$924,000 for non-Africans. (JEL I12, J17, O15, O18, R41)

The value of life and its regional difference in China

PurposeThe purpose of this paper is to estimate the value of a statistical life (VSL) in China using the hedonic wage model, and to explore the regional difference in VSL within the country.Design/methodology/approachUsing the hedonic wage regression, this paper estimates the compensating wage differential for incremental job mortality risk among Chinese workers. The implied VSL is derived for China and its different regions. The data is from the 2005 China inter‐census population survey, consisting of 1.3 million urban and rural workers. The authors also made important improvement in the model specification to explicitly address the missing variable issue in the previous studies.FindingsThe paper results indicate that the industry mortality risk has a significant impact on the wage rate. The implied VSL is 1.81 million RMB, a value substantially higher than previous estimates. The results also suggest a sizable urban‐rural difference, with the urban VSL being 4.3 times higher than the rural estimate. The strong urban‐rural inequality of income could be attributed to the segregation between the urban and rural labor markets.Practical implicationsThe paper findings indicate the importance of reforming the current workers' compensation standard and improving the institutional environment, as well as enhancing the labor protection in the rural labor market.Originality/valueThis paper is the first attempt to estimate the value of life in China using the census based data. The paper results contribute to the growing literature in obtaining comparable VSL estimates in the developing countries.

Estimating the Value of a Statistical Life Using Census of Fatal Occupational Injuries (CFOI) Data

Labor market estimates of the value of a statistical life (VSL) using the Census of Fatal Occupational Injury (CFOI) data take advantage of this more accurate fatality data and the capability to construct more refined measures of worker fatality risks. This paper reviews all labor market VSL studies that have used these data, including estimates of VSL by age, immigrant status, gender, smoking status, and race. Government agencies are increasingly relying on these estimates rather than the previous VSL literature for policy evaluation purposes. The CFOI data are especially valuable for panel studies by making it possible to assess changes in risk levels for job changers based on estimates of fatality rates over time by industry and occupation. The paper presents new VSL estimates using both the new hours-based fatality risk measure and the previous employment-based measure, yielding similar results.

ASSESSING WHETHER THERE IS A CANCER PREMIUM FOR THE VALUE OF A STATISTICAL LIFE

This article estimates whether there is a cancer risk premium for the value of a statistical life using stated preference valuations of cancer risks for a large, nationally representative US sample. The present value of an expected cancer case that occurs after a one decade latency period is $10.85m, consistent with a cancer premium that is 21% greater than the median value of a statistical life estimates for acute fatalities. This cancer premium is smaller than the premium proposed for policy analyses in the UK and the USA. There is also a greater premium for policies that reduce cancer risks to zero and for risk reductions affecting those who perceive themselves to have a greater than average probability of having cancer.

Willingness to Accept Equals Willingness to Pay for Labor Market Estimates of the Value of Statistical Life

Our research clarifies the conceptual linkages among willingness to pay for additional safety, willingness to accept less safety, and the value of a statistical life (VSL). We present econometric estimates using panel data to analyze the VSL levels associated with job changes that may affect the worker’s exposure to fatal injury risks. Our baseline VSL estimates are $7.7 million and $8.3 million ($2001). There is no statistically significant divergence between willingness-to-accept VSL estimates associated with wage increases for greater risks and willingness-to-pay VSL estimates as reflected in wage changes for decreases in risk. Our focal result contrasts with the literature documenting a considerable asymmetry in tradeoff rates for increases and decreases in risk. An important implication for policy is that it is reasonable to use labor market estimates of VSL as a measure of the willingness to pay for additional safety.

ROY MODEL SORTING AND NONRANDOM SELECTION IN THE VALUATION OF A STATISTICAL LIFE*

Wage‐hedonics is used to recover the value of a statistical life (VSL) by exploiting the fact that workers choosing riskier occupations are compensated with a higher wage. Roy (Oxford Economic Papers 3 (1951), 135–46) suggests that observed wage distributions will be distorted if individuals choose jobs according to idiosyncratic returns. We describe how this type of sorting biases wage‐hedonic VSL estimates and implement two new estimation strategies that correct that bias. Using data from the Current Population Surveys, we recover VSL estimates that are three to four times larger than those based on the traditional techniques, statistically significant, and robust to a wide array of specifications.

Assessing Whether There Is a Cancer Premium for the Value of a Statistical Life

This article estimates whether there is a cancer risk premium for the value of a statistical life (VSL) using stated preference valuations of cancer risks for a large, nationally representative U.S. sample. The present value of an expected cancer case that occurs after a one decade latency period is $10.85 million, consistent with a cancer premium that is 21% greater than the median VSL estimates for acute fatalities. This cancer premium is smaller than the premium proposed for policy analyses in the U.K. and the U.S. There is also a greater premium for policies that reduce cancer risks to zero and for risk reductions affecting those who perceive themselves to have a greater than average probability of getting cancer.

The value of a statistical life in Sweden: A review of the empirical literature

Recent focus on cost-benefit/socio-economic assessment of government “life-saving” programmes within public health, pharmaceutics, transport, and civil contingencies has spurred a wave of empirical research on the value of a statistical life (VSL) in Sweden. This paper provides an overview of the received evidence from a range of studies in one country and over a relatively short time period. A literature search was conducted in Econlit, Pubmed, Google Scholar and in bibliographies of published papers. Twelve studies on VSL with a total of 48 VSL estimates, published with data from Sweden from 1996 onwards, were identified. Among all estimates VSL varies from 9 to 1121 million SEK (€0.9–121 million). Based on a set of additional quality inclusion criteria, as used also in a recent global review of VSL studies, the sample is restricted to 9 studies with a total of 29 VSL estimates with VSL varying from 9 to 98 million SEK (€0.9–10.6 million). The raw mean among these estimates is 34.6 million SEK (€3.7 million) and the median is 23 million SEK (€2.5 million). Currently, official authorities in Sweden recommend a VSL of 22 million Swedish kronor (€2.4 million). We also point out important concerns regarding validity of these estimates: primarily the problem that VSL is significantly related to the size of the mortality risk reduction showing significant scale insensitivity, in contrast to theoretical assumptions but in line with previous empirical findings.

Taking “All Men Are Created Equal” Seriously: Toward a Metric for the Intergroup Comparison of Utility Functions Through Life Values

The use of wage differential techniques to estimate the value of a statistical life (VSL) leads to the conclusion that willingness to pay for risk reduction increases with income. However, the use of this result in policy-relevant calculations, such as benefit-cost analysis, has led to criticism among ethicists and the lay public, at the same time as it has been defended in the economic literature. In this paper, we argue that differential valuation measures not a differential value that individuals place upon their own lives, but a differential value that they place upon marginal economic resources. Using two sets of VSL estimates from metastudies, we provide an initial estimate of the relative marginal value of income, allowing interpersonal comparison at the societal level. With these results, we propose an empirically determined, ethically justifiable social welfare function that can be easily incorporated into benefit-cost analysis and that has important implications for development economics, although more work is necessary to provide a robust estimate.

Using value of statistical life for the ex ante evaluation of transport policy options: a discussion based on ethical theory

This paper aims to discuss a number of questions that are highly important for the ex ante evaluation of the safety impacts of transport policy options, from the perspective of ethical theory: (1) Is it morally OK to express prevention on acceptance of fatalities or risks in monetary terms? (2) How useful is the concept of the value of a statistical life (VOSL) for ex ante evaluations of transport policy options? (3) What are the pros and cons of pricing protection of lives or prevention of risks in ex ante evaluations? (4) Which methods are available for expressing (protection of) human lives in monetary terms, and what are the main related methodological discussions? (5) Are all safety-related costs generally included in ex ante evaluations of the safety impacts of transport policy options, and if not: what is the relevance of excluded costs categories from an ethical perspective? (6) How important is the distribution of safety effects from an ethical perspective? The answer to the first question highly depends on the ethical theory that is used. With respect to question 2 we think that the VOSL is a useful concept, but that its application is not straightforward, for several reasons. Thirdly we think that probably pricing safety improves the quality of decision making, but to the best of our knowledge there is no research to underpin this expectation. The answer to question 4 is that several methods exist to estimate the value of a statistical life (VOSL), willingness-to-pay (WTP) methods being the most common category of methods. However, several methodological issues arise that make estimates of VOSL less straightforward. With respect to question 5 we conclude that behaviour-related avoidance costs are often overlooked and that these costs are relevant from an ethical perspective because the freedom to move and the freedom to participate in activities are challenged. Finally the answer to question 6 is that from an ethical perspective, in terms of the evaluation of policy measures, it might matter which groups of the population are the victims of the transport system, or are at risk. Egalitarian theories as well as sufficientarianism are useful theories to discuss distribution effects. Different theories conclude differently.

Projecting the Health and Economic Impact of Road Safety Initiatives: A Case Study of a Multi-country Project

Objective: The Road Safety in 10 Countries (RS-10) project will implement 12 different road safety interventions at specific sites within 10 low- and middle-income countries (LMICs). This evaluation reports the number of lives that RS-10 is projected to save in those locations, the economic value of the risk reduction, and the maximum level of investment that a public health intervention of this magnitude would be able to incur before its costs outweigh its health benefits. Methods: We assumed a 5-year time implementation horizon corresponding to the duration of RS-10. Based on a preliminary literature review, we estimated the effectiveness for each of the RS-10 interventions. Applying these effectiveness estimates to the size of the population at risk at RS-10 sites, we calculated the number of lives and life years saved (LYS) by RS-10. We projected the value of a statistical life (VSL) in each RS-10 country based on gross national income (GNI) and estimated the value of the lives saved using each country's VSL. Sensitivity analysis addressed robustness to assumptions about elasticity, discount rates, and intervention effectiveness. Results: From the evidence base reviewed, only 13 studies met our selection criteria. Such a limited base presents uncertainties about the potential impact of the modeled interventions. We tried to account for these uncertainties by allowing effectiveness to vary ±20 percent for each intervention. Despite this variability, RS-10 remains likely to be worth the investment. RS-10 is expected to save 10,310 lives over 5 years (discounted at 3%). VSL and $/LYS methods provide concordant results. Based on our estimates of each country's VSL, the respective countries would be willing to pay $2.45 billion to lower these fatality risks (varying intervention effectiveness by ±20 percent, the corresponding range is $2.0–$2.9 billion). Analysis based on $/LYS shows that the RS-10 project will be cost-effective as long as its costs do not exceed $5.14 billion (under ±20% intervention effectiveness, the range = $4.1–$6.2 billion). Even at low efficacy, these estimates are still several orders of magnitude above the $125 million projected investment. Conclusion: RS-10 is likely to yield high returns for invested resources. The study's chief limitation was the reliance on the world's limited evidence base on how effective the road safety interventions will be. Planned evaluation of RS-10 will enhance planners’ ability to conduct economic assessments of road safety in developing countries.

Are estimates of the value of a statistical life exaggerated?

The magnitude of the value of a statistical life (VSL) is critical to the evaluation of many health and safety initiatives. To date, the large and rigorous VSL research literature has not explicitly accommodated publication selectivity bias (i.e., the reduced probability that insignificant or negative VSL values are reported). This study demonstrates that doing so is essential. For studies that employ hedonic wage equations to estimate VSL, correction for selection bias reduces the average value of a statistical life by 70–80%. Our meta-regression analysis also identifies several sources for the wide heterogeneity found among reported VSL estimates.

Protecting endangered species: When are shoot-on-sight policies the only viable option to stop poaching?

Protecting endangered species that offer poachers from low-income countries high economic benefits remains a policy challenge. A broadly applicable economic model of poaching shows why CITES international bans have not always been successful, especially in situations where black markets exist and nonpoaching wages are low. In these situations, poachers may have nothing left to lose, since low nonpoaching wages impose a practical cap on the potential economic costs of fines and imprisonment. Thus, the model suggests “shoot-on-sight” policies as the only viable option. Trends in animal populations appear to support the efficacy of the shoot-on-sight policies, which also suggests an inherent value of life traditionally not captured in Value of a Statistical Life estimates.