Identifying the Legitimate Role of the Value of a Statistical Life in Legal Contexts

Forthcoming, Journal of Legal Economics

Vanderbilt Law Research Paper No. 19-23 (2019)

34 Pages Posted: 27 Jul 2019

See all articles by W. Kip Viscusi

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

Date Written: July 25, 2019

Abstract

This article is based on my keynote address at the American Academy of Economic and Financial Experts conference in which I examined some of the implications for legal contexts of my book, Pricing Lives: Guideposts for a Safer Society. The value of a statistical life (VSL) provides an economic measure of the efficient cost-risk tradeoff rate for mortality risk decisions. Consequently, the VSL is well suited to serving as a measure of the benefits of mortality risk reduction for government regulatory policies and for corporate risk decisions. The tort liability counterpart of this function is using the VSL to assess the possible negligence of corporate risk decisions. Setting total damages equal to the VSL also can provide efficient levels of deterrence in punitive damages contexts. Unlike situations of property damage losses for which making the victim whole leads to efficient levels of insurance and deterrence, in personal injury contexts, damages amounts that create efficient deterrence incentives do not also provide the efficient levels of insurance. Hedonic damages based on the VSL exceed the efficient level of insurance in wrongful death cases.

Keywords: value of a statistical life, VSL, wrongful death, loss of enjoyment of life, hedonic damages

JEL Classification: K13, K32, K41, J17

Suggested Citation

Viscusi, W. Kip, Identifying the Legitimate Role of the Value of a Statistical Life in Legal Contexts (July 25, 2019). Forthcoming, Journal of Legal Economics; Vanderbilt Law Research Paper No. 19-23 (2019). Available at SSRN: https://ssrn.com/abstract=3426763

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
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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

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