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Statistical vs. Identified Lives in Benefit-Cost Analysis

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  • HAMMITT James K
  • TREICH Nicolas

    (LERNA, University of Toulouse)

Abstract

Evaluation of projects that affect mortality risk usually assumes that risk changes are small and similar across individuals. In reality, risks differ among individuals and information about risk heterogeneity determines the extent to which affected lives are “statistical” or “identified” and influences the outcome of benefit-cost analysis (BCA). The effects of information about risk heterogeneity on BCA depend on, inter alia, whether information concerns heterogeneity of baseline or change in risk and whether valuation uses compensating or equivalent variation. BCA does not systematically favor identified over statistical lives. We suggest some political factors that may explain the apparent public bias. Copyright Springer Science+Business Media, LLC 2007
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • HAMMITT James K & TREICH Nicolas, 2006. "Statistical vs. Identified Lives in Benefit-Cost Analysis," LERNA Working Papers 06.11.204, LERNA, University of Toulouse.
  • Handle: RePEc:ler:wpaper:06.11.204
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    References listed on IDEAS

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    6. Henrik Andersson & Nicolas Treich, 2011. "The Value of a Statistical Life," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 17, Edward Elgar Publishing.
    7. Adler, Matthew & Hammitt, James & Treich, Nicolas, 2012. "The Social Value of Mortality Risk Reduction: VSL vs. the Social Welfare Function Approach," LERNA Working Papers 12.08.365, LERNA, University of Toulouse.
    8. Hammitt, James K., 2020. "Accounting for the distribution of benefits & costs in benefit-cost analysis," TSE Working Papers 20-1116, Toulouse School of Economics (TSE).
    9. Lisa A. Robinson & James K. Hammitt, 2013. "Behavioral economics and the conduct of benefit–cost analysis: towards principles and standards," Chapters, in: Scott O. Farrow & Richard Zerbe, Jr. (ed.), Principles and Standards for Benefit–Cost Analysis, chapter 10, pages 317-363, Edward Elgar Publishing.
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    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. Treich, Nicolas, 2010. "The value of a statistical life under ambiguity aversion," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 15-26, January.
    13. 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.
    14. 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.
    15. Adler, Matthew D. & Hammitt, James K. & Treich, Nicolas, 2014. "The social value of mortality risk reduction: VSL versus the social welfare function approach," Journal of Health Economics, Elsevier, vol. 35(C), pages 82-93.
    16. Carl F. Cranor & Adam M. Finkel, 2018. "Toward the usable recognition of individual benefits and costs in regulatory analysis and governance," Regulation & Governance, John Wiley & Sons, vol. 12(1), pages 131-149, March.
    17. Christoph Rheinberger, 2011. "A Mixed Logit Approach to Study Preferences for Safety on Alpine Roads," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(1), pages 121-146, May.
    18. Mario Andres Fernandez & Douglas Shaw, 2013. "Willingness to pay for intervention policies related to HIV/AIDS: a theoretical framework with endogenous risk, perceived effectiveness and altruism," Economics Bulletin, AccessEcon, vol. 33(2), pages 1457-1467.
    19. 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.
    20. 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.
    21. James K. Hammitt & Peter Morfeld & Jouni T. Tuomisto & Thomas C. Erren, 2020. "Premature Deaths, Statistical Lives, and Years of Life Lost: Identification, Quantification, and Valuation of Mortality Risks," Risk Analysis, John Wiley & Sons, vol. 40(4), pages 674-695, April.
    22. Branden B. Johnson & Adam M. Finkel, 2023. "Sensitivity to scope in estimating the social benefits of prolonging lives for regulatory decisions using national stated preference tradeoffs," Environment Systems and Decisions, Springer, vol. 43(3), pages 509-528, September.
    23. Butts, Marcus M. & Lunt, Devin C. & Freling, Traci L. & Gabriel, Allison S., 2019. "Helping one or helping many? A theoretical integration and meta-analytic review of the compassion fade literature," Organizational Behavior and Human Decision Processes, Elsevier, vol. 151(C), pages 16-33.

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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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