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On the Definition and Age-Dependency of the Value of a Statistical Life

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  • Johansson, Per-Olov
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    Abstract

    The value of preventing a fatality or (saving) a statistical life is an important question in health economics as well as environmental economics. This paper adds new insights to several of the issues discussed in the literature. It is shown that the conventional way of measuring the value of a statistical life yields a biased estimate, in general. The major exception is the case where the estimate can be based on an infinitely short drop in the hazard rate. This is so in both life cycle models with and without actuarially fair annuities. Moreover, the claim that there are strong theoretical reasons for believing that the value of statistical life declines with age is shown to be wrong. Copyright 2002 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Risk and Uncertainty.

    Volume (Year): 25 (2002)
    Issue (Month): 3 (November)
    Pages: 251-63

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    Handle: RePEc:kap:jrisku:v:25:y:2002:i:3:p:251-63

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    Web page: http://www.springerlink.com/link.asp?id=100299

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    Cited by:
    1. Ryan Edwards, 2013. "The cost of uncertain life span," Journal of Population Economics, Springer, vol. 26(4), pages 1485-1522, October.
    2. Strand, Jon, 2006. "Valuation of environmental improvements in continuous time with mortality and morbidity effects," Resource and Energy Economics, Elsevier, vol. 28(3), pages 229-241, August.
    3. Hammitt, James & Roman, Henry & Stieb, David & Walsh, Tyra, 2012. "Expert Elicitation of the Value per Statistical Life in an Air Pollution Context," LERNA Working Papers 12.10.367, LERNA, University of Toulouse.
    4. Viscusi, W. Kip & Aldy, Joseph, 2006. "Labor Market Estimates of the Senior Discount for the Value of Statistical Life," Discussion Papers dp-06-12, Resources For the Future.
    5. Antoine Bommier & Bertrand Villeneuve, 2004. "Risk Aversion and the Value of Risk to Life," CESifo Working Paper Series 1267, CESifo Group Munich.
    6. 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.
    7. Johansson-Stenman, Olof & Martinsson, Peter, 2008. "Are some lives more valuable? An ethical preferences approach," Journal of Health Economics, Elsevier, vol. 27(3), pages 739-752, May.
    8. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2011. "Externalities in a life cycle model with endogenous survival," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 627-641.
    9. Antoine Bommier, 2005. "Life-Cycle Theory for Human Beings," Working Papers hal-00441890, HAL.
    10. Hammitt, James & Rheinberger, Christoph, 2013. "The Welfare Value of FDA’s Mercury-in-Fish Advisory: A Dynamic Reanalysis," TSE Working Papers 13-409, Toulouse School of Economics (TSE).
    11. Kniesner Thomas J & Viscusi W. Kip & Ziliak James P, 2006. "Life-Cycle Consumption and the Age-Adjusted Value of Life," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-36, January.
    12. Andrea Leiter, 2011. "Age effects in monetary valuation of reduced mortality risks: the relevance of age-specific hazard rates," The European Journal of Health Economics, Springer, vol. 12(4), pages 331-344, August.
    13. Myers, Robert J., 2006. "On the costs of food price fluctuations in low-income countries," Food Policy, Elsevier, vol. 31(4), pages 288-301, August.
    14. Bleichrodt, Han & Eeckhoudt, Louis, 2006. "Survival risks, intertemporal consumption, and insurance: The case of distorted probabilities," Insurance: Mathematics and Economics, Elsevier, vol. 38(2), pages 335-346, April.

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