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The Heterogeneous Value of a Statistical Life: Evidence from U.S. Army Reenlistment Decisions

Author

Listed:
  • Greenstone, Michael
  • Greenberg, Kyle
  • Ryan, Stephen
  • Yankovich, Michael

Abstract

This paper estimates the value of a statistical life (VSL), or the willingness to trade-off wealth and mortality risk, among 430,000 U.S. Army soldiers choosing whether to reenlist between 2002 and 2010. Using a discrete choice random utility approach and significant variation in retention bonuses and mortality risk, we recover average VSL estimates that range between $500,000 and $900,000, an order of magnitude smaller than U.S. civilian labor market estimates. Additionally, we fulfill Rosen's (1974) vision to recover indifference curves between wealth and non-market goods (e.g., mortality risk) and document substantial heterogeneity in preferences within and across types. We find the VSL increases rapidly with mortality risk within type, and that soldiers in combat occupations have much lower VSLs than those in noncombat occupations. We estimate that the quadrupling of mortality risk from the Afghanistan and Iraq wars reduced annual welfare by $2,355 per soldier, roughly 8 percent of pay.

Suggested Citation

  • Greenstone, Michael & Greenberg, Kyle & Ryan, Stephen & Yankovich, Michael, 2021. "The Heterogeneous Value of a Statistical Life: Evidence from U.S. Army Reenlistment Decisions," CEPR Discussion Papers 16425, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16425
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    Cited by:

    1. Thomas J. Kniesner & W. Kip Viscusi, 2023. "Compensating Differentials for Occupational Health and Safety Risks: Implications of Recent Evidence," Research in Labor Economics, in: 50th Celebratory Volume, volume 50, pages 83-116, Emerald Group Publishing Limited.
    2. John Anders & Craig Wesley Carpenter, 2021. "Run Effects of Military Service: Evidence from the 911 Attacks," Working Papers 21-36, Center for Economic Studies, U.S. Census Bureau.

    More about this item

    Keywords

    Value of life; Forgone income; Wage level and structure; Wage differentials; Public sector labor markets;
    All these keywords.

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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