The Value of Life

Viscusi, W. Kip

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The Value of Life

New Palgrave Dictionary of Economics and the Law, 2nd Edition

Vanderbilt Law and Economics Research Paper No. 08-04

18 Pages Posted: 14 Oct 2005 Last revised: 15 Jan 2008

See all articles by W. Kip Viscusi

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Abstract

The economic approach to valuing risks to life focuses on risk-money tradeoffs for very small risks of death, or the value of statistical life (VSL). These VSL levels will generally exceed the optimal insurance amounts. A substantial literature has estimated the wage-fatality risk tradeoffs, implying a median VSL of $7 million for U.S. workers. International evidence often indicates a lower VSL, which is consistent with the lower income levels in less developed countries. Preference heterogeneity also generates different tradeoff rates across the population as people who are more willing to bear risk will exhibit lower wage-risk tradeoffs.

Keywords: value of life, risk regulation

JEL Classification: I10, J17, J28

Suggested Citation: Suggested Citation

Viscusi, W. Kip, The Value of Life. New Palgrave Dictionary of Economics and the Law, 2nd Edition, Vanderbilt Law and Economics Research Paper No. 08-04, Available at SSRN: https://ssrn.com/abstract=827205