The Value of a Statistical Life: Evidence from Panel Data

40 Pages Posted: 13 Jan 2011 Last revised: 27 Nov 2012

See all articles by Thomas J. Kniesner

Thomas J. Kniesner

Department of Economic Sciences; Syracuse University - Department of Economics; IZA Institute of Labor Economics

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

Christopher Woock

Abbott Laboratories

James P. Ziliak

University of Kentucky - Department of Economics

Date Written: March 1, 2011

Abstract

This article 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. Here we address most of the prominent econometric issues using panel data, a new and more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity that may be correlated with the regressors, state dependence, and sample composition yields estimates of the value of a statistical life in the range of about $6 million to $10 million. This comparatively narrow range greatly clarifies the assessments of the cost-effectiveness of regulatory decisions. We show that probably the most important econometric issue is controlling for latent heterogeneity; less important is how one does it.

Keywords: Value of Statistical Life, VSL, CFOI, Panel Data, Fixed Effects, Random Effects, Long-Differences, PSID

JEL Classification: C23, I18 J17, J28, K00

Suggested Citation

Kniesner, Thomas J. and Viscusi, W. Kip and Woock, Christopher and Ziliak, James P., The Value of a Statistical Life: Evidence from Panel Data (March 1, 2011). Review of Economics and Statistics, Forthcoming; Vanderbilt Law and Economics Research Paper No. 11-02. Available at SSRN: https://ssrn.com/abstract=1739139

Thomas J. Kniesner

Department of Economic Sciences ( email )

Claremont, CA 91711
United States

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States
315-443-4589 (Phone)
315-443-1081 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

Christopher Woock

Abbott Laboratories ( email )

100 Abbott Park Road
Abbott Park, IL 60064-6008
United States

James P. Ziliak

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

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