Pinning Down the Value of Statistical Life
34 Pages Posted: 14 Nov 2007
Date Written: October 2007
Our research addresses fundamental long - standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of statistical life (VSL) and the wide range of such estimates from about $0.5 million to about $21 million. We address most of the prominent econometric issues by applying panel data, a new and more accurate fatality risk measure, and systematic selection of panel estimator in our research. Controlling for measurement error, endogeneity, individual heterogeneity, and state dependence yields both a reasonable average level and narrow range for the estimated value of a statistical life of about $5.5 - $7.5 million.
Keywords: VSL, panel data, fixed effects, random effects, PSID
JEL Classification: I10, J17, J28, K00
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