Euthanizing the Value of a Statistical Life

For economists, the term "value of a statistical life" (VSL) is an eminently reasonable label for the concept it describes. However, outside our discipline, this terminology has been singularly unhelpful. This article argues that there could be a considerable reduction in wasted resources if economists were to change this terminology to something less incendiary, and that this could help to increase the acceptance of benefit--cost analysis as an input to the decision-making process for environmental, health, and safety regulations. I propose that we change our standard unit of measurement and replace the VSL terminology with "willingness to swap (WTS) alternative goods and services for a microrisk reduction in the chance of sudden death." Analogous terminology would be used for other types of risks to life and health. I also argue that economists' continual pursuit of a single number for "the" VSL is misguided and can be misleading, especially if individual WTS is correlated with the magnitudes of the risk changes. Such "one-size-fits-all" VSLs also hinder our ability to understand the distributional consequences of risk-reducing policies or interventions. Estimates of aggregate risk reduction benefits need to reflect the particular type of risk reduction as well as the characteristics of the affected populations. Copyright 2010, Oxford University Press.