What is a Life Worth?

Abstract

An unpleasant but necessary job of policymakers is to place a value on saving a human life. Because society has limited resources that it can spend on health and safety improvements, it should obtain the greatest benefit for each dollar spent, and ascertaining an appropriate value is necessary to that effort. As one would expect, the correct numerical value to place on a life, typically called the value of a statistical life, or VSL, is a matter of great controversy. Hundreds of analyses using widely varying methodologies have been conducted to determine this value. Despite their differences, most of the studies center on one basic idea: The VSL should roughly correspond to the value that people place on their lives in their private decisions.

Keywords: risk, mortality risk reductions, value of life, value of a statistical life, VSLs, forensic economics, quality-adjusted life-year, QALY, value of a statistical life year, VSLY, cost-benefit analyses, public policy, regulation

JEL Classification: J17, J18