Age Differences in the Value of Statistical Life: Revealed Preference Evidence
Joseph E. Aldy
Harvard Kennedy School; National Bureau of Economic Research; Resources for the Future
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
April 1, 2007
RFF Discussion Paper No. 07-05
Revealed preference evidence, especially based on wage-risk tradeoffs in the labor market, provides the primary empirical basis for analyses of the value of statistical life (VSL). This market evidence also provides guidance on how VSL varies with age. While labor market studies have generated conflicting evidence - some showing that VSL rises with age and others showing that VSL declines with age - more refined estimates that take into account the age variation in job fatality risks or life-cycle patterns of consumption show an inverted-U relation between the VSL and age. The value of a statistical life year shows a similar pattern and is not time-invariant. Applying estimates of the VSL-age relationship to an analysis of the Clear Skies initiative illustrates the implications of recognizing the age-VSL relationship.
Number of Pages in PDF File: 31
Keywords: value of statistical life, VSL, value of statistical life year, risk
JEL Classification: I10, J17, J28working papers series
Date posted: April 12, 2007 ; Last revised: November 27, 2012
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