Pricing Lives: International Guideposts for Safety
26 Pages Posted: 7 Feb 2018
Date Written: October 27, 2017
Government agencies throughout the world use the value of a statistical life (VSL) to monetize the mortality risk reduction benefits of government policies. The most reliable empirical estimates of the VSL using U.S. labor market data are about US$10 million (year 2015 U.S. dollars). Based on international estimates of the income elasticity of the VSL, one can transfer these values to other countries, leading to my VSL estimate for Australia of US$7.9 million, or A$10.0 million, which is over double the current Australia best practices number. Transferring U.S. VSL estimates to other nations after accounting for income differences will boost global VSL estimates. Potential refinements of the VSL based on age and income are also feasible. The VSL could serve a pivotal role in promoting safety by valuing lives in litigation contexts, regulatory sanctions, and corporate risk analyses.
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