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On the Definition and Age-Dependency of the Value of a Statistical Life. A Review and Extension

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  • Johansson, Per-Olov

    (Dept. of Economics, Stockholm School of Economics)

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 reviews and adds new insights to several of the issues discussed in the literature. For example, how do we define the value of a (statistical) life? Are there really strong theoretical reasons for believing that the value of a life declines with age? The paper derives definitions of the value of a statistical life in both single-period models and life-cycle models. Models with and without actuarially fair annuities are examined, as well as the age-profile of the value of a statistical life.

Suggested Citation

  • Johansson, Per-Olov, 2002. "On the Definition and Age-Dependency of the Value of a Statistical Life. A Review and Extension," SSE/EFI Working Paper Series in Economics and Finance 490, Stockholm School of Economics, revised 29 Jan 2002.
    • Handle: RePEc:hhs:hastef:0490
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    References listed on IDEAS

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    3. Johansson, Per-Olov, 2001. "Is there a meaningful definition of the value of a statistical life?," Journal of Health Economics, Elsevier, vol. 20(1), pages 131-139, January.
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    9. Blomqvist, Ake, 2002. "Defining the value of a statistical life: a comment," Journal of Health Economics, Elsevier, vol. 21(1), pages 169-175, January.
    10. Chang, Fwu-Ranq, 1991. "Uncertain Lifetimes, Retirement and Economic Welfare," Economica, London School of Economics and Political Science, vol. 58(230), pages 215-232, May.
    11. Jones-Lee, M W, 1991. "Altruism and the Value of Other People's Safety," Journal of Risk and Uncertainty, Springer, vol. 4(2), pages 213-219, April.
    12. Donald S. Shepard & Richard J. Zeckhauser, 1984. "Survival versus Consumption," Management Science, INFORMS, vol. 30(4), pages 423-439, April.
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    Citations

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    Cited by:

    1. Antoine Bommier & Bertrand Villeneuve, 2012. "Risk Aversion and the Value of Risk to Life," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(1), pages 77-104, March.
    2. Rheinberger, Christoph M. & Hammitt, James K., 2014. "The welfare value of FDA's mercury-in-fish advisory: A dynamic reanalysis," Journal of Health Economics, Elsevier, vol. 37(C), pages 113-122.
    3. Henry A. Roman & James K. Hammitt & Tyra L. Walsh & David M. Stieb, 2012. "Expert Elicitation of the Value per Statistical Life in an Air Pollution Context," Risk Analysis, John Wiley & Sons, vol. 32(12), pages 2133-2151, December.
    4. Henrik Andersson & Nicolas Treich, 2011. "The Value of a Statistical Life," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 17, Edward Elgar Publishing.
    5. Aldy, Joseph E. & Smyth, Seamus J., 2014. "Heterogeneity in the Value of Life," RFF Working Paper Series dp-14-13, Resources for the Future.
    6. Joseph E. Aldy, 2019. "Birds of a feather: Estimating the value of statistical life from dual-earner families," Journal of Risk and Uncertainty, Springer, vol. 58(2), pages 187-205, June.
    7. Nerhagen, Lena & LI, Chuan-Zhong, 2010. "Valuing Statistical Lives Or Life Years? A Choice Experimental Study," Working Papers 2010:11, Swedish National Road & Transport Research Institute (VTI).
    8. Kuhn, Michael & Frankovic, Ivan & Wrzaczek, Stefan, 2017. "Medical Progress, Demand for Health Care, and Economic Performance," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168249, Verein für Socialpolitik / German Economic Association.
    9. Antoine Bommier & François Grand, 2014. "Too risk averse to purchase insurance?," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 135-166, April.
    10. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2015. "Optimal choice of health and retirement in a life-cycle model," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 186-212.
    11. James O’Brien, 2018. "Age, autos, and the value of a statistical life," Journal of Risk and Uncertainty, Springer, vol. 57(1), pages 51-79, August.
    12. Jaldell Henrik, 2013. "Cost-benefit analyses of sprinklers in nursing homes for elderly," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(2), pages 209-235, August.
    13. Daniel Bauer & Darius Lakdawalla & Julian Reif, 2018. "Mortality Risk, Insurance, and the Value of Life," NBER Working Papers 25055, National Bureau of Economic Research, Inc.
    14. Joseph E. Aldy, 2019. "Birds of a Feather: Estimating the Value of Statistical Life from Dual-Earner Families," NBER Working Papers 25708, National Bureau of Economic Research, Inc.
    15. Aldy, Joseph, 2019. "Birds of a Feather: Estimating the Value of Statistical Life from Dual-Earner Families," Working Paper Series rwp19-013, Harvard University, John F. Kennedy School of Government.
    16. Evans, Mary F. & Smith, V. Kerry, 2006. "Do we really understand the age-VSL relationship?," Resource and Energy Economics, Elsevier, vol. 28(3), pages 242-261, August.

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    More about this item

    Keywords

    Value of a statistical life; value of preventing a fatality; age-specific values; willingness to pay;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • I10 - Health, Education, and Welfare - - Health - - - General

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