The Value of a Statistical Life Under Ambiguity Aversion

42 Pages Posted: 30 Apr 2008

See all articles by Nicolas Treich

Nicolas Treich

French National Institute for Agricultural Research (INRA); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 2008

Abstract

We show that ambiguity aversion increases the value of a statistical life as soon as the marginal utility of wealth is higher if alive than dead. The intuition is that ambiguity aversion has a similar effect as an increase in the perceived baseline mortality risk, and thus operates as the "dead anyway" effect. We suggest, however, that ambiguity aversion should usually have a modest effect on the prevention of ambiguous mortality risks within benefit-cost analysis, and can hardly justify the substantial "ambiguity premium" apparently embodied in environmental policy-making.

Keywords: ambiguity, value-of-a-statistical-life, uncertainty, risk-aversion, willingness-to-pay, benefit-cost analysis, environmental risk, health policy

JEL Classification: D81, Q51, I18

Suggested Citation

Treich, Nicolas, The Value of a Statistical Life Under Ambiguity Aversion (April 2008). CESifo Working Paper Series No. 2291. Available at SSRN: https://ssrn.com/abstract=1126635

Nicolas Treich (Contact Author)

French National Institute for Agricultural Research (INRA) ( email )

147, rue de l'Universite
Paris Cedex 07, 78-Yvelines 75338
France
+33 0 1 42 75 90 00 (Phone)
+33 0 1 47 05 99 66 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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