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The Valuation of Risk of Death in Public Sector Decision-Making

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  • R. A. Meng
  • Douglas A. Smith

Abstract

The unavoidable trade-off between monetary expenditures and health and safety benefits means that the risk of death must be considered in a wide variety of public sector decisions. This paper argues that this consideration should be explicit and consistent across policy areas. The most conceptually valid approach to the valuation of benefits from reduced risk is to base estimates on the required compensation for exposure to risk. An empirical estimate of required compensation is generated by measuring the statistical value of life based on data from the Canadian labor market. The estimated value of life is $5.2 million in 1983 dollars. This is recommended as a useful lower bound estimate for a variety of public policy applications in Canada. In some applications, we argue that substantially higher values are required.

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Bibliographic Info

Article provided by University of Toronto Press in its journal Canadian Public Policy.

Volume (Year): 16 (1990)
Issue (Month): 2 (June)
Pages: 137-144

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Handle: RePEc:cpp:issued:v:16:y:1990:i:2:p:137-144

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Postal: University of Toronto Press Journals Division 5201 Dufferin Street Toronto, Ontario, Canada M3H 5T8
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  1. Blomquist, Glenn C, 1979. "Value of Life Saving: Implications of Consumption Activity," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 540-58, June.
  2. Dillingham, Alan E, 1985. "The Influence of Risk Variable Definition on Value-of-Life Estimates," Economic Inquiry, Western Economic Association International, vol. 23(2), pages 277-94, April.
  3. Craig A. Olson, 1981. "An Analysis of Wage Differentials Received by Workers on Dangerous Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 167-185.
  4. Marin, Alan & Psacharopoulos, George, 1982. "The Reward for Risk in the Labor Market: Evidence from the United Kingdom and a Reconciliation with Other Studies," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 827-53, August.
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Citations

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Cited by:
  1. Dionne, Georges & Lanoie, Paul, 2003. "Public Choice About the Value of a Statistical Life For Cost-Benefit Analyses: The Case of Road Safety," Working paper 140, Regulation2point0.
  2. G. Dionne & P. Lanoie, 2002. "How to Make a Public Choice about the Value of a Statistical Life : The Case of Road Safety," THEMA Working Papers 2002-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  3. Nikolaos Georgantzis & Efi Vasileiou, 2012. "Are dangerous jobs paid better? European evidence," Working Papers 2012/18, Economics Department, Universitat Jaume I, Castellón (Spain).
  4. Meng, Ronald, 1991. "Compensating wages for long-term job hazards in Canadian industry," Economics Letters, Elsevier, vol. 36(3), pages 331-336, July.
  5. François Bellavance & Georges Dionne & Martin Lebeau, 2006. "The Value of a Statistical Life: a Meta-Analysis with a Mixed Effects Regression Model," Cahiers de recherche 0646, CIRPEE.
  6. Kip Viscusi, W. & Aldy, Joseph E., 2007. "Labor market estimates of the senior discount for the value of statistical life," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 377-392, May.
  7. Aldy, Joseph E. & Viscusi, W. Kip, 2007. "Age Differences in the Value of Statistical Life: Revealed Preference Evidence," Discussion Papers dp-07-05, Resources For the Future.
  8. Aldy, Joseph E. & Viscusi, W. Kip, 2003. "The Value of Statistical Life: A Critical Review of Market Estimates throughout the World," Working paper 282, Regulation2point0.
  9. Alan Krupnick, 2002. "The value of reducing risk of death: a policy perspective," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 275-282.
  10. Joseph E. Aldy & W. Kip Viscusi, 2004. "Age Variations in Workers' Value of Statistical Life," NBER Working Papers 10199, National Bureau of Economic Research, Inc.

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