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


  • H. Spencer Banzhaf


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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    References listed on IDEAS

    1. H. Spencer Banzhaf, 2009. "Objective or Multi-Objective? Two Historically Competing Visions for Benefit-Cost Analysis," Land Economics, University of Wisconsin Press, vol. 85(1), pages 3-23.
    2. Orley Ashenfelter, 2006. "Measuring the Value of a Statistical Life: Problems and Prospects," Economic Journal, Royal Economic Society, vol. 116(510), pages 10-23, March.
    3. Broome, John, 1978. "Trying to value a life," Journal of Public Economics, Elsevier, vol. 9(1), pages 91-100, February.
    4. Roland N. McKean, 1963. "Cost-Benefit Analysis And British Defence Expenditure," Scottish Journal of Political Economy, Scottish Economic Society, vol. 10(1), pages 17-35, February.
    5. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    6. James Hammitt & Nicolas Treich, 2007. "Statistical vs. identified lives in benefit-cost analysis," Journal of Risk and Uncertainty, Springer, vol. 35(1), pages 45-66, August.
    7. Esther-Mirjam Sent, 2007. "Some like it cold: Thomas Schelling as a Cold Warrior," Journal of Economic Methodology, Taylor & Francis Journals, vol. 14(4), pages 455-471.
    8. Mirowski,Philip, 2002. "Machine Dreams," Cambridge Books, Cambridge University Press, number 9780521772839, September.
    9. Selma J. Mushkin, 1962. "Health as an Investment," NBER Chapters, in: Investment in Human Beings, pages 129-157, National Bureau of Economic Research, Inc.
    10. H. Spencer Banzhaf, 2010. "Consumer Surplus with Apology: A Historical Perspective on Nonmarket Valuation and Recreation Demand," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 183-207, October.
    11. Mirowski,Philip, 2002. "Machine Dreams," Cambridge Books, Cambridge University Press, number 9780521775267, September.
    12. Charles Hitch, 1955. "An Appreciation of Systems Analysis," Operations Research, INFORMS, vol. 3(4), pages 466-481, November.
    13. Trudy Ann Cameron, 2010. "Euthanizing the Value of a Statistical Life," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 161-178, Summer.
    14. Selma J. Mushkin, 1962. "Health as an Investment," Journal of Political Economy, University of Chicago Press, vol. 70, pages 129-129.
    15. repec:reg:rpubli:282 is not listed on IDEAS
    16. Charles Hitch, 1953. "Sub-Optimization in Operations Problems," Operations Research, INFORMS, vol. 1(3), pages 87-99, May.
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    Cited by:

    1. 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.
    2. 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.
    3. Abraham, Rosa, 2016. "Informal employment in India: An analysis of forms and determinants," Working Papers 363, Institute for Social and Economic Change, Bangalore.
    4. 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.
    5. Foudi, Sébastien & Spadaro, Joseph V. & Chiabai, Aline & Polanco-Martínez, Josué M. & Neumann, Marc B., 2017. "The climatic dependencies of urban ecosystem services from green roofs: Threshold effects and non-linearity," Ecosystem Services, Elsevier, vol. 24(C), pages 223-233.
    6. Banzhaf, H. Spencer, 2016. "Constructing markets: environmental economics and the contingent valuation controversy," MPRA Paper 78814, University Library of Munich, Germany.
    7. 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.
    8. 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.

    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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