Age Variations in Workers' Value of Statistical Life

57 Pages Posted: 19 Oct 2004

See all articles by Joseph E. Aldy

Joseph E. Aldy

Harvard Kennedy School; National Bureau of Economic Research; Resources for the Future; Harvard University - Harvard Kennedy School (HKS)

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2004

Abstract

This paper develops a life-cycle model in which workers choose both consumption levels and job fatality risks, implying that the effect of age on the value of life is ambiguous. The empirical analysis of this relationship uses novel, age-dependent fatal and nonfatal risk variables. Workers' value of statistical life exhibits an inverted U-shaped relationship over workers' life cycle based on hedonic wage model estimates, age-specific hedonic wage estimates, and a minimum distance estimator. The value of statistical life for a 60-year-old ranges from $2.5 million to $3.0 million - less than half the value for 30- to 40-year-olds.

Keywords: value of life, job risks, hedonic wage regression, VSLY

JEL Classification: J17, I12

Suggested Citation

Aldy, Joseph E. and Viscusi, W. Kip, Age Variations in Workers' Value of Statistical Life (March 2004). Available at SSRN: https://ssrn.com/abstract=607204 or http://dx.doi.org/10.2139/ssrn.607204

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W. Kip Viscusi

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