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Pinning Down the Value of Statistical Life

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Author Info

  • Kniesner, Thomas J.

    ()
    (Syracuse University)

  • Viscusi, W. Kip

    ()
    (Vanderbilt University)

  • Woock, Christopher

    ()
    (The Conference Board)

  • Ziliak, James P.

    ()
    (University of Kentucky)

Abstract

Our research addresses fundamental long-standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of statistical life (VSL) and the wide range of such estimates from about $0.5 million to about $21 million. We address most of the prominent econometric issues by applying panel data, a new and more accurate fatality risk measure, and systematic selection of panel estimator in our research. Controlling for measurement error, endogeneity, individual heterogeneity, and state dependence yields both a reasonable average level and narrow range for the estimated value of a statistical life of about $5.5–$7.5 million.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3107.

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Length: 34 pages
Date of creation: Oct 2007
Date of revision:
Publication status: published in: Review of Economics and Statistics, 2012, 94 (1) , 74-87
Handle: RePEc:iza:izadps:dp3107

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
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Web page: http://www.iza.org

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Keywords: random effects; fixed effects; panel data; VSL; PSID;

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References

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  1. Ashenfelter, Orley, 2006. "Measuring the Value of a Statistical Life: Problems and Prospects," IZA Discussion Papers 1911, Institute for the Study of Labor (IZA).
  2. Orley Ashenfelter & Michael Greenstone, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," Working Papers 105, Princeton University, Department of Economics, Center for Economic Policy Studies..
  3. Kevin Lang & Sumon Majumdar, 2004. "The Pricing Of Job Characteristics When Markets Do Not Clear: Theory And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1111-1128, November.
  4. Ashenfelter, Orley & Greenstone, Michael, 2002. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," IZA Discussion Papers 571, Institute for the Study of Labor (IZA).
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  6. W. Kip Viscusi, 2004. "The Value of Life: Estimates with Risks by Occupation and Industry," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 42(1), pages 29-48, January.
  7. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc.
  8. Hannes Spengler & Sandra Schaffner, 2007. "Using Job Changes to Evaluate the Bias of the Value of a Statistical Life," Discussion Papers of DIW Berlin 713, DIW Berlin, German Institute for Economic Research.
  9. Arellano, Manuel, 1989. "A note on the Anderson-Hsiao estimator for panel data," Economics Letters, Elsevier, vol. 31(4), pages 337-341, December.
  10. James P. Ziliak & Thomas J. Kniesner, 1998. "The Importance of Sample Attrition in Life Cycle Labor Supply Estimation," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 507-530.
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  14. Ziliak, J.P. & Kniesner, T.J., 1996. "The Importance of Sample Attrition in Life Cycle Labor Supply," Discussion Paper, Tilburg University, Center for Economic Research 1996-46, Tilburg University, Center for Economic Research.
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  24. Lillard, Lee A & Weiss, Yoram, 1979. "Components of Variation in Panel Earnings Data: American Scientists, 1960-70," Econometrica, Econometric Society, Econometric Society, vol. 47(2), pages 437-54, March.
  25. John M. Abowd & David Card, 1986. "On the Covariance Structure of Earnings and Hours Changes," NBER Working Papers 1832, National Bureau of Economic Research, Inc.
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  28. W. Kip Viscusi & Joni Hersch, 2001. "Cigarette Smokers As Job Risk Takers," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 269-280, May.
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Citations

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Cited by:
  1. 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.
  2. Thomas DeLeire & Shakeeb Khan & Christopher Timmins, 2013. "Roy Model Sorting And Nonrandom Selection In The Valuation Of A Statistical Life," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(1), pages 279-306, 02.
  3. Dionne, Georges & Lebeau, Martin, 2010. "Le calcul de la valeur statistique d'une vie humaine
    [Estimation of statistical value of life]
    ," MPRA Paper 37573, University Library of Munich, Germany.
  4. Schaffner, Sandra & Spengler, Hannes, 2010. "Using job changes to evaluate the bias of value of a statistical life estimates," Resource and Energy Economics, Elsevier, vol. 32(1), pages 15-27, January.
  5. Wehn-Jyuan Tsai & Jin-Tan Liu & James Hammitt, 2011. "Aggregation Biases in Estimates of the Value per Statistical Life: Evidence from Longitudinal Matched Worker-Firm Data in Taiwan," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(3), pages 425-443, July.
  6. Hannes Spengler & Sandra Schaffner, 2007. "Using Job Changes to Evaluate the Bias of the Value of a Statistical Life," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0014, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Naoi, Michio & Seko, Miki & Sumita, Kazuto, 2009. "Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 658-669, November.
  8. Martinez Perez, Jorge Eduardo & Mendez Martinez, Ildefonso, 2008. "¿Qué podemos saber sobre el Valor Estadístico de la Vida en España utilizando datos laborales?," MPRA Paper 11165, University Library of Munich, Germany.
  9. 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, LERNA, University of Toulouse 12.10.367, LERNA, University of Toulouse.
  10. Goucher, Jeremy & Horrace, William C., 2012. "The value of life: Real risks and safety-related productivity in the Himalaya," Labour Economics, Elsevier, vol. 19(1), pages 27-32.
  11. Scotton, Carol R. & Taylor, Laura O., 2011. "Valuing risk reductions: Incorporating risk heterogeneity into a revealed preference framework," Resource and Energy Economics, Elsevier, vol. 33(2), pages 381-397, May.

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