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

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Author Info
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

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Paper provided by Department of Economics University of Milan Italy in its series Departemental Working Papers with number 2006-23.

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Date of creation: 13 Oct 2006
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Handle: RePEc:mil:wpdepa:2006-23

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Related research
Keywords: Value of a statistical life; value of preventing a fatality; age-specific values; willingness to pay;

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Find related papers by 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 and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis

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  3. Rosen, Sherwin, 1988. " The Value of Changes in Life Expectancy," Journal of Risk and Uncertainty, Springer, vol. 1(3), pages 285-304, September.
    Other versions:
  4. Johannesson, Magnus & Johansson, Per-Olov & Lofgren, Karl-Gustaf, 1997. "On the Value of Changes in Life Expectancy: Blips versus Parametric Changes," Journal of Risk and Uncertainty, Springer, vol. 15(3), pages 221-39, December. [Downloadable!] (restricted)
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  5. Strand, Jon, 2006. "Valuation of environmental improvements in continuous time with mortality and morbidity effects," Resource and Energy Economics, Elsevier, vol. 28(3), pages 229-241, August. [Downloadable!] (restricted)
  6. Leung, Siu Fai, 1994. "Uncertain Lifetime, the Theory of the Consumer, and the Life Cycle Hypothesis," Econometrica, Econometric Society, vol. 62(5), pages 1233-39, September. [Downloadable!] (restricted)
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  7. LaFrance, Jeffrey T. & Barney, L. Dwayne, 1991. "The envelope theorem in dynamic optimization," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 355-385, April. [Downloadable!] (restricted)
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  11. Blomqvist, Ake, 2002. "Defining the value of a statistical life: a comment," Journal of Health Economics, Elsevier, vol. 21(1), pages 169-175, January. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
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