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On the definition and estimation of the value of a “statistical life”

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  • Per-Olov JOHANSSON

Abstract

The presentation will discuss the economic meaning of the concept of the Value of a Statistical Life (VSL) and review some of its properties. In particular, the age pattern of the VSL is considered. The presentation will also review recent estimates of the magnitude of a VSL taken from different countries and cultures. 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 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

  • Per-Olov JOHANSSON, 2006. "On the definition and estimation of the value of a “statistical life”," Departmental Working Papers 2006-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2006-23
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    File URL: http://wp.demm.unimi.it/files/wp/2006/DEMM-2006_023wp.pdf
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    References listed on IDEAS

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    1. Magnus Johannesson;Bengt Jonsson;Linus Jonsson;Gisela Kobelt;Niklas Zethraeus, 2009. "Why Should Economic Evaluations of Medical Innovations Have a Societal Perspective?," Briefing 000228, Office of Health Economics.

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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:

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

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