The Cold-War Origins of the Value of Statistical Life (VSL)

19 Pages Posted: 28 Nov 2013 Last revised: 31 Jan 2016

H. Spencer Banzhaf

Georgia State University - Department of Economics; PERC - Property and Environment Research Center; National Bureau of Economic Research (NBER)

Date Written: November 26, 2013

Abstract

This paper traces the history of the "Value of Statistical Life" (VSL), which today is used routinely in benefit-cost analysis of life-saving investments. Schelling (1968) made the crucial move of thinking in terms of risk rather than individual lives, with the hope to dodge the moral thicket of valuing "life." But as recent policy debates have illustrated, his move only thickened it. Tellingly, interest in the subject can be traced back another twenty years before Schelling's essay, to a controversy at the RAND Corporation following its earliest application of operation research to defense planning. RAND wanted to avoid valuing pilot's lives, but the Air Force insisted they confront the issue. Thus, the VSL is not only well acquainted with political controversy; it was born from it.

Keywords: value of statistical life, history of economic thought, benefit cost analysis, RAND

JEL Classification: B2, D7, H5, I1, J3

Suggested Citation

Banzhaf , H. Spencer, The Cold-War Origins of the Value of Statistical Life (VSL) (November 26, 2013). Andrew Young School of Policy Studies Research Paper Series No. 13-16. Available at SSRN: https://ssrn.com/abstract=2360205 or http://dx.doi.org/10.2139/ssrn.2360205

H. Spencer Banzhaf (Contact Author)

Georgia State University - Department of Economics ( email )

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