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The Value of Life

W. Kip Viscusi
Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management

New Palgrave Dictionary of Economics and the Law, 2nd Edition
Vanderbilt Law and Economics Research Paper No. 08-04

Abstract:
The economic approach to valuing risks to life focuses on risk-money tradeoffs for very small risks of death, or the value of statistical life (VSL). These VSL levels will generally exceed the optimal insurance amounts. A substantial literature has estimated the wage-fatality risk tradeoffs, implying a median VSL of $7 million for U.S. workers. International evidence often indicates a lower VSL, which is consistent with the lower income levels in less developed countries. Preference heterogeneity also generates different tradeoff rates across the population as people who are more willing to bear risk will exhibit lower wage-risk tradeoffs.

Keywords: value of life, risk regulation

JEL Classifications: I10, J17, J28

Accepted Paper Series

Date posted: October 14, 2005 ; Last revised: January 15, 2008

Suggested Citation

Viscusi, W. Kip, The Value of Life. New Palgrave Dictionary of Economics and the Law, 2nd Edition; Vanderbilt Law and Economics Research Paper No. 08-04. Available at SSRN: http://ssrn.com/abstract=827205

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