The Valuation of Risk of Death in Public Sector Decision-Making
The unavoidable trade-off between monetary expenditures and health and safety benefits means that the risk of death must be considered in a wide variety of public sector decisions. This paper argues that this consideration should be explicit and consistent across policy areas. The most conceptually valid approach to the valuation of benefits from reduced risk is to base estimates on the required compensation for exposure to risk. An empirical estimate of required compensation is generated by measuring the statistical value of life based on data from the Canadian labor market. The estimated value of life is $5.2 million in 1983 dollars. This is recommended as a useful lower bound estimate for a variety of public policy applications in Canada. In some applications, we argue that substantially higher values are required.
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Volume (Year): 16 (1990)
Issue (Month): 2 (June)
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References listed on IDEAS
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- Dillingham, Alan E, 1985. "The Influence of Risk Variable Definition on Value-of-Life Estimates," Economic Inquiry, Western Economic Association International, vol. 23(2), pages 277-294, April.
- Craig A. Olson, 1981. "An Analysis of Wage Differentials Received by Workers on Dangerous Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 167-185.
- Marin, Alan & Psacharopoulos, George, 1982. "The Reward for Risk in the Labor Market: Evidence from the United Kingdom and a Reconciliation with Other Studies," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 827-853, August.
- Blomquist, Glenn C, 1979. "Value of Life Saving: Implications of Consumption Activity," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 540-558, June.