Calculating the Economic Value of Non-marginal Mortality Risk Reductions
18 Pages Posted: 12 Jul 2023 Last revised: 15 Jul 2023
Date Written: July 13, 2023
Benefit-cost analyses in public health typically calculate the benefits of mortality reduction interventions by multiplying the Value of a Statistical Life (VSL) and the expected decrease in fatalities. This procedure approximates the benefits of small mortality changes but is inaccurate for large risk changes because it holds constant the VSL — a marginal rate of substitution. Building on the theoretical framework of the VSL, we derive expressions to calculate the benefits of non-marginal mortality reductions with empirically-calibrated compensating variations and illustrate their use.
Keywords: Value of a Statistical Life, VSL, Benefit-Cost Analysis, Mortality Risk
JEL Classification: D61, D81, H51, I10, I18, Q51
Suggested Citation: Suggested Citation