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An Empirical Bayes Approach to Combining and Comparing Estimates of the Value of a Statistical Life for Environmental Policy Analysis

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  • Ikuho Kochi
  • Bryan Hubbell
  • Randall Kramer

Abstract

An empirical Bayes pooling method is used to combine and compare estimates of the value of a statistical life (VSL). The data come from 40 selected studies published between 1974 and 2002, containing 197 VSL estimates. The estimated composite distribution of empirical Bayes adjusted VSL has a mean of $5.4 million and a standard deviation of $2.4 million. The empirical Bayes method greatly reduces the variability around the pooled VSL estimate. The pooled VSL estimate is influenced by the choice of valuation method, study location, and union status of sample but not to the source of data on occupational risk or the consideration of non-fatal risk injury. Copyright Springer 2006

Suggested Citation

  • Ikuho Kochi & Bryan Hubbell & Randall Kramer, 2006. "An Empirical Bayes Approach to Combining and Comparing Estimates of the Value of a Statistical Life for Environmental Policy Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(3), pages 385-406, July.
    • Handle: RePEc:kap:enreec:v:34:y:2006:i:3:p:385-406
    DOI: 10.1007/s10640-006-9000-8
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    More about this item

    Keywords

    value of a statistical life (VSL); empirical Bayes estimate; environmental policy; health policy; contingent valuation method; hedonic wage method; J17; C11; Q28;
    All these keywords.

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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