The Heterogeneous Value of a Statistical Life: Evidence from U.S. Army Reenlistment Decisions

74 Pages Posted: 22 Sep 2021

See all articles by Kyle Greenberg

Kyle Greenberg

United States Military Academy, West Point

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Stephen Ryan

Washington University in St. Louis - John M. Olin Business School

Michael Yankovich

United States Military Academy, West Point

Multiple version iconThere are 3 versions of this paper

Date Written: August 1, 2021

Abstract

This paper estimates the value of a statistical life (VSL), or the willingness to trade-off wealth and mortality risk, among 430,000 U.S. Army soldiers choosing whether to reenlist between 2002 and 2010. Using a discrete choice random utility approach and significant variation in retention bonuses and mortality risk, we recover average VSL estimates that range between $500,000 and $900,000, an order of magnitude smaller than U.S. civilian labor market estimates. Additionally, we fulfill Rosen's (1974) vision to recover indifference curves between wealth and non-market goods (e.g., mortality risk) and document substantial heterogeneity in preferences within and across types. We find the VSL increases rapidly with mortality risk within type, and that soldiers in combat occupations have much lower VSLs than those in noncombat occupations. We estimate that the quadrupling of mortality risk from the Afghanistan and Iraq wars reduced annual welfare by $2,355 per soldier, roughly 8 percent of pay.

Keywords: Forgone Income, Public Sector Labor Markets, Value of Life, wage differentials, Wage Level and Structure

JEL Classification: J17, J31, J45

Suggested Citation

Greenberg, Kyle and Greenstone, Michael and Ryan, Stephen and Yankovich, Michael, The Heterogeneous Value of a Statistical Life: Evidence from U.S. Army Reenlistment Decisions (August 1, 2021). CEPR Discussion Paper No. DP16425, Available at SSRN: https://ssrn.com/abstract=3928704

Kyle Greenberg (Contact Author)

United States Military Academy, West Point ( email )

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West Point, NY 10996
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Michael Greenstone

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
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Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
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National Bureau of Economic Research (NBER)

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Stephen Ryan

Washington University in St. Louis - John M. Olin Business School ( email )

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Campus Box 1133
St. Louis, MO 63130-4899
United States

Michael Yankovich

United States Military Academy, West Point ( email )

600 Thayer Rd
West Point, NY 10996
United States

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