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Retrospectives: The Cold-War Origins of the Value of Statistical Life

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  • H. Spencer Banzhaf

Abstract

This paper traces the history of the "Value of Statistical Life" (VSL), which today is used routinely in benefit-cost analysis of life-saving investments. The "value of statistical life" terminology was introduced by Thomas Schelling (1968) in his essay, "The Life You Save May Be Your Own." Schelling made the crucial move to think in terms of risk rather than individual lives, with the hope to dodge the moral thicket of valuing "life." But as recent policy debates have illustrated, his move only thickened it. Tellingly, interest in the subject can be traced back another twenty years before Schelling's essay to a controversy at RAND Corporation following its earliest application of operations research to defense planning. RAND wanted to avoid valuing pilot's lives but the Air Force insisted they confront the issue. Thus, the VSL is not only well acquainted with political controversy; it was born from it.

Suggested Citation

  • H. Spencer Banzhaf, 2014. "Retrospectives: The Cold-War Origins of the Value of Statistical Life," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 213-226, Fall.
  • Handle: RePEc:aea:jecper:v:28:y:2014:i:4:p:213-26
    Note: DOI: 10.1257/jep.28.4.213
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.28.4.213
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    References listed on IDEAS

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    Cited by:

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    2. Nathalie B Simon & Chris Dockins & Kelly B Maguire & Stephen C Newbold & Alan J Krupnick & Laura O Taylor, 2019. "Policy Brief—What’s in a Name? A Search for Alternatives to “VSL”," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 155-161.
    3. Wiktor L. (Vic) Adamowicz, 2016. "Economic Analysis and Species at Risk: Lessons Learned and Future Challenges," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(1), pages 21-32, March.
    4. Agamoni Majumder & S. Madheswaran, 2017. "Compensating wage differential and value of statistical life: a meta-analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 60(4), pages 527-548, December.
    5. Majumder, Agamoni & Madheswaran, S., 2016. "Value of statistical life: A meta analysis with mixed effects regression model," Working Papers 362, Institute for Social and Economic Change, Bangalore.
    6. Abraham, Rosa, 2016. "Informal employment in India: An analysis of forms and determinants," Working Papers 363, Institute for Social and Economic Change, Bangalore.
    7. Dower, Castaneda & Markevich, Andrei & Weber, Shlomo, 2018. "The Value of a Statistical Life in a Dictatorship: Evidence from Stalin," CEPR Discussion Papers 12814, C.E.P.R. Discussion Papers.
    8. Banzhaf, H. Spencer, 2016. "Constructing markets: environmental economics and the contingent valuation controversy," MPRA Paper 78814, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

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