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Policy Relevant Heterogeneity in the Value of Statistical Life: New Evidence from Panel Data Quantile Regressions

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Author Info
Thomas J. Kniesner () (Krisher Professor of Economics and Senior Research Associate, Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020)
W. Kip Viscusi (University Distinguished Professor of Law, Economics, and Management, Vanderbilt University, Nashville, TN)
James P. Ziliak (Carol Martin Gatton Chair in Microeconomics; Director, Center for Poverty Research, University of Kentucky, Lexington, KY)

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Abstract

We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is $7 million to $8 million per life saved, but the VSL varies considerably cross the labor force. Our results reconcile the previous discrepancies betweenhedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time.

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File URL: http://www-cpr.maxwell.syr.edu/cprwps/pdf/wp118.pdf
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Publisher Info
Paper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Working Papers with number 118.

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Length: 32 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:max:cprwps:118

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Related research
Keywords: value of statistical life; VSL; quantile regression; panel data; fixed effects; PSID; fatality risk; CFOI;

Other versions of this item:

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
I10 - Health, Education, and Welfare - - Health - - - General
J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
K00 - Law and Economics - - General - - - General (including Data Sources and Description)

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This page was last updated on 2009-11-27.

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