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The Value of a Statistical Life: Evidence from Panel Data

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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 to almost $30 million. Here we address most of the prominent econometric issues by applying panel data, a new and more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity that may be correlated with the regressors, state dependence, and sample composition yields an estimated value of a statistical life of about $7 million–$12 million, which we show can clarify greatly the cost-effectiveness of regulatory decisions. We show that probably the most important econometric issue is controlling for latent heterogeneity; less important is how one does it.

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File URL: http://www.maxwell.syr.edu/uploadedFiles/cpr/publications/working_papers2/wp122.pdf
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Bibliographic Info

Paper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Working Papers with number 122.

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Length: 41 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:max:cprwps:122

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Postal: 426 Eggers Hall, Syracuse, New York USA 13244-1020
Phone: (315) 443-3114
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Web page: http://www.maxwell.syr.edu/cpr.aspx
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Related research

Keywords: VSL; panel data; fixed effects; random effects; long-differences; PSID;

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Cited by:
  1. Brown, Timothy Tyler, 2014. "How effective are public health departments at preventing mortality?," Economics & Human Biology, Elsevier, vol. 13(C), pages 34-45.
  2. Bergstrom Ted C. & Garratt Rod & Sheehan-Connor Damien, 2012. "Stem Cell Donor Matching for Patients of Mixed Race," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-27, July.
  3. Kniesner, Thomas J. & Viscusi, W. Kip & Ziliak, James P., 2009. "Policy Relevant Heterogeneity in the Value of Statistical Life: New Evidence from Panel Data Quantile Regressions," IZA Discussion Papers 4508, Institute for the Study of Labor (IZA).
  4. Maureen Cropper & James K. Hammitt & Lisa A. Robinson, 2011. "Valuing Mortality Risk Reductions: Progress and Challenges," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 313-336, October.
  5. W. Viscusi, 2010. "The heterogeneity of the value of statistical life: Introduction and overview," Journal of Risk and Uncertainty, Springer, vol. 40(1), pages 1-13, February.
  6. Dennis Guignet & Anna Alberini, 2013. "Can Property Values Capture Changes in Environmental Health Risks? Evidence from a Stated Preference Study in Italy and the UK," Working Papers 2013.67, Fondazione Eni Enrico Mattei.
  7. Josep Pijoan-Mas & Jose-Victor Rios-Rull, 2012. "Heterogeneity in expected longevities," Staff Report 471, Federal Reserve Bank of Minneapolis.
  8. Thomas J. Kniesner & Andrew Friedson, 2011. "Losers and Losers: Some Demographics of Medical Malpractice Tort Reforms," Center for Policy Research Working Papers 132, Center for Policy Research, Maxwell School, Syracuse University.
  9. Jonathan M. Lee & Laura O. Taylor, 2014. "Randomized Safety Inspections And Risk Exposure On The Job: Quasi-Experimental Estimates Of The Value Of A Statistical Life," Working Papers 14-05, Center for Economic Studies, U.S. Census Bureau.
  10. Tomas J. Philipson & George Zanjani, 2013. "Economic Analysis of Risk and Uncertainty induced by Health Shocks: A Review and Extension," NBER Working Papers 19005, National Bureau of Economic Research, Inc.
  11. Luke Haywood, 2014. "Too Rich to Do the Dirty Work?: Wealth Effects on the Demand for Good Jobs," Discussion Papers of DIW Berlin 1355, DIW Berlin, German Institute for Economic Research.
  12. Guardado, José R. & Ziebarth, Nicolas R., 2013. "A Model of Worker Investment in Safety and Its Effects on Accidents and Wages," IZA Discussion Papers 7428, Institute for the Study of Labor (IZA).
  13. Cameron, Trudy Ann & DeShazo, J.R., 2013. "Demand for health risk reductions," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 87-109.
  14. Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2012. "New Estimates of the Value of a Statistical Life Using Air Bag Regulations as a Quasi-Experiment," IZA Discussion Papers 6994, Institute for the Study of Labor (IZA).
  15. Kniesner, Thomas J. & Viscusi, W. Kip & Ziliak, James P., 2012. "Willingness to Accept Equals Willingness to Pay for Labor Market Estimates of the Value of Statistical Life," IZA Discussion Papers 6816, Institute for the Study of Labor (IZA).

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