Adjusting the Value of a Statistical Life for Age and Cohort Effects
Resources for the Future Discussion Paper No. 06-19
31 Pages Posted: 26 Apr 2006 Last revised: 27 Nov 2012
Date Written: January 2008
To resolve the theoretical ambiguity in the effect of age on the value of statistical life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U shaped relationship with age. In the year 2000 cross-section, workers' VSL rises from $3.7 million (ages 18-24), to $9.7 million (35-44), and declines to $3.4 million (55-62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the VSL-age relationship. The value of statistical life-year also follows an inverted-U shape with age.
Keywords: Value of statistical life, job risks, hedonic wage regression, VSLY
JEL Classification: J17, I12
Suggested Citation: Suggested Citation