The Military VSL

Abstract

This paper reviews theory and empirical evidence in the economics literature and provides a standard VSL applicable to the Department of Defense (DOD). We follow Viscusi (2018a) by conducting a meta-analysis consisting of 1,025 VSL estimates from 68 different labor market studies and find a “best-set” average VSL estimate of $11.8 million (US$2021) across all studies. For DOD analysts and practitioners, we advocate using this best-set VSL estimate for the vast majority of benefit-cost analyses (BCAs) within the DOD. In addition to providing a VSL benchmark to use in DOD BCAs, we also breakdown casualty types and provide a range of VSL estimates to use in sensitivity analyses. For this section of the analysis, we use restricted data from the DOD on over 6,700 U.S. military fatalities in Afghanistan and Iraq from 2001 to 2021. Fatalities are highly concentrated among young, white, and enlisted males. In addition, we find higher fatality rates in the Army and Marines in contrast to the low number of fatalities (less than 5%) in the Air Force and Navy. Applying standard VSL pay grade and income adjustments to U.S. military fatalities in Afghanistan and Iraq, we find adjusted VSL estimates ranging in value from $3.2 million to $27.6 million per statistical life (US$2021).

Keywords: Military, DOD, VSL

JEL Classification: H56, I18, J17, J28