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Randomized Safety Inspections and Risk Exposure on the Job: Quasi-experimental Estimates of the Value of a Statistical Life

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  • Jonathan M. Lee
  • Laura O. Taylor

Abstract

The value of a statistical life (VSL) is a critical driver of estimated benefits for federal policies designed to improve human health, safety, and environmental exposures. The vast majority of empirical evidence on the magnitude of the VSL arises from hedonic wage models that have been plagued by measurement error and omitted variables. To address these limitations, this paper employs randomly assigned workplace safety inspections to instrument for plant-level risks in a quasi-experimental design. We provide credible causal evidence for the existence of compensating wages for fatality risks and estimate a VSL between $(2016)8 million and $(2016)10 million.

Suggested Citation

  • Jonathan M. Lee & Laura O. Taylor, 2019. "Randomized Safety Inspections and Risk Exposure on the Job: Quasi-experimental Estimates of the Value of a Statistical Life," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 350-374, November.
    • Handle: RePEc:aea:aejpol:v:11:y:2019:i:4:p:350-74
    Note: DOI: 10.1257/pol.20150024
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    Cited by:

    1. Herrera-Araujo, Daniel & Rochaix, Lise, 2020. "Does the Value per Statistical Life vary with age or baseline health? Evidence from a compensating wage study in France," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    2. Ketcham, Jonathan & Kuminoff, Nicolai & Saha, Nirman, 2023. "Valuing Statistical Life Using Seniors' Medical Spending," RFF Working Paper Series 23-16, Resources for the Future.
    3. Kathleen Segerson & Catherine L. Kling & Nancy E. Bockstael, 2022. "Contributions of women at the intersection of agricultural economics and environmental and natural resource economics," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 38-53, March.
    4. Joseph Richardson, 2023. "Health Risks and Labour Supply," Working Papers 379420583, Lancaster University Management School, Economics Department.
    5. Gabriele Curci & Domenico Depalo & Alessandro Palma, 2023. "The Dirtier You Breathe, The Less Safe You Are. The Effect of Air Pollution on Work Accidents," CEIS Research Paper 554, Tor Vergata University, CEIS, revised 24 May 2023.
    6. Ling Li & Perry Singleton, 2021. "The Effect of Industrial Robots on Workplace Safety," Center for Policy Research Working Papers 239, Center for Policy Research, Maxwell School, Syracuse University.
    7. Gianmarco León & Edward Miguel, 2017. "Risky Transportation Choices and the Value of a Statistical Life," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 202-228, January.
    8. Sam Desiere & Christian Walker, 2023. "The Shift Premium: Evidence From A Discrete Choice Experiment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 23/1074, Ghent University, Faculty of Economics and Business Administration.
    9. Cropper, Maureen L. & Joiner, Emily & Krupnick, Alan, 2023. "Revisiting the Environmental Protection Agency's Value of a Statistical Life," RFF Working Paper Series 23-30, Resources for the Future.
    10. Hammitt, James K. & Treich, Nicolas, 2021. "Fatality Risk Regulation," TSE Working Papers 21-1177, Toulouse School of Economics (TSE).
    11. Colmer, Jonathan & Voorheis, John, 2020. "The grandkids aren't alright: the intergenerational effects of prenatal pollution exposure," LSE Research Online Documents on Economics 108495, London School of Economics and Political Science, LSE Library.
    12. Aldy, Joseph E. & Atkinson, Giles & Kotchen, Matthew J., 2021. "Environmental benefit-cost analysis: a comparative analysis between the United States and the United Kingdom," LSE Research Online Documents on Economics 110879, London School of Economics and Political Science, LSE Library.
    13. Castañeda Dower, Paul & Markevich, Andrei & Weber, Shlomo, 2021. "The value of a statistical life in a dictatorship: Evidence from Stalin," European Economic Review, Elsevier, vol. 133(C).
    14. Massimo Anelli & Felix Koenig, 2021. "Willingness to Pay for Workplace Safety," CESifo Working Paper Series 9469, CESifo.
    15. Nicolai V. Kuminoff, 2018. "Can Understanding Spatial Equilibria Enhance Benefit Transfers for Environmental Policy Evaluation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 591-608, March.

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    More about this item

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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