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Euthanizing the Value of a Statistical Life

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  • Trudy Ann Cameron

Abstract

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.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:renvpo:v:4:y:2010:i:2:p:161-178
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    File URL: http://hdl.handle.net/10.1093/reep/req010
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    Citations

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    Cited by:

    1. Fouquet, Roger, 2011. "Long run trends in energy-related external costs," Ecological Economics, Elsevier, vol. 70(12), pages 2380-2389.
    2. Cameron, Trudy Ann & DeShazo, J.R., 2013. "Demand for health risk reductions," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 87-109.
    3. Kochi, Ikuho & Taylor, Laura O., 2011. "Risk Heterogeneity and the Value of Reducing Fatal Risks: Further Market-Based Evidence," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 2(03), pages 1-28, August.
    4. Maureen Cropper & James K. Hammitt & Lisa A. Robinson, 2011. "Valuing Mortality Risk Reductions: Progress and Challenges," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 313-336, October.
    5. Bert Wee & Piet Rietveld, 2013. "Using value of statistical life for the ex ante evaluation of transport policy options: a discussion based on ethical theory," Transportation, Springer, vol. 40(2), pages 295-314, February.
    6. John C. Whitehead & O. Ashton Morgan & William L. Huth & Gregory S. Martin & Richard Sjolander, 2012. "Willingness-to-Pay for Oyster Consumption Mortality Risk Reductions," Working Papers 12-07, Department of Economics, Appalachian State University.
    7. Louise B Russell, 2014. "Do We Really Value Identified Lives More Highly Than Statistical Lives?," Departmental Working Papers 201413, Rutgers University, Department of Economics.
    8. Courard-Hauri David & Lauer Stephen A., 2012. "Taking "All Men Are Created Equal" Seriously: Toward a Metric for the Intergroup Comparison of Utility Functions Through Life Values," Journal of Benefit-Cost Analysis, De Gruyter, vol. 3(3), pages 1-30, August.
    9. Jonathan M. Lee & Laura O. Taylor, 2014. "Randomized Safety Inspections And Risk Exposure On The Job: Quasi-Experimental Estimates Of The Value Of A Statistical Life," Working Papers 14-05, Center for Economic Studies, U.S. Census Bureau.
    10. Doucouliagos, Hristos & Stanley, T. D. & Giles, Margaret, 2011. "Are estimates of the value of a statistical life exaggerated?," Economics Series eco_2011_2, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
    11. 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.
    12. Scotton Carol R., 2013. "New risk rates, inter-industry differentials and the magnitude of VSL estimates," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(1), pages 39-80, March.
    13. Doucouliagos, Chris & Stanley, T.D. & Giles, Margaret, 2012. "Are estimates of the value of a statistical life exaggerated?," Journal of Health Economics, Elsevier, vol. 31(1), pages 197-206.
    14. Gerking, Shelby & Dickie, Mark & Veronesi, Marcella, 2014. "Valuation of human health: An integrated model of willingness to pay for mortality and morbidity risk reductions," Journal of Environmental Economics and Management, Elsevier, vol. 68(1), pages 20-45.
    15. Trudy Cameron & J. DeShazo & Peter Stiffler, 2010. "Demand for health risk reductions: A cross-national comparison between the U.S. and Canada," Journal of Risk and Uncertainty, Springer, vol. 41(3), pages 245-273, December.
    16. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-016-0033-3 is not listed on IDEAS
    17. 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.
    18. Christoph M. Rheinberger & Nicolas Treich, 2017. "Attitudes Toward Catastrophe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 609-636, July.

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