Labor Market Estimates of the Senior Discount for the Value of Statistical 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; Vanderbilt University - Strategy and Business Economics
Joseph E. Aldy
Harvard Kennedy School; National Bureau of Economic Research; Resources for the Future
Resources for the Future Discussion Paper No. 06-12
This article develops the first measures of age-industry job risks to examine the age variations in the value of statistical life. Because of the greater risk vulnerability of older workers, they face flatter wage-risk gradients than younger workers, which we show to be the case empirically. Accounting for this heterogeneity in hedonic market equilibria leads to estimates of the value of statistical life-age relationship that follows an inverted-U shape. The estimates of the value of statistical life range from $6.4 million for younger workers to a peak of $9.0 million for those age 35-44, and then a decline to $3.7 million for those age 55-62. The decline of the estimated VSL with age is consistent with there being some senior discount in the Clear Skies Initiative analysis.
Number of Pages in PDF File: 35
Keywords: value of statistical life, job risks, senior discount, compensating differentials
JEL Classification: J17, I12
Date posted: March 2, 2006
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