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Kip W Viscusi - One of the best experts on this subject based on the ideXlab platform.
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extending the domain of the value of a Statistical Life
Social Science Research Network, 2020Co-Authors: Kip W ViscusiAbstract:The value of a Statistical Life (VSL) establishes the money-risk tradeoff that U.S. government agencies have used for four decades to monetize the mortality reduction benefits of proposed regulations. This article advocates the adoption of the VSL more generally both for policy evaluation purposes and for setting the magnitude of regulatory sanctions involving fatalities. Agencies currently employ the inconsistent practice of using the VSL to set the stringency of regulations, while at the same time reverting to very low monetary values of sanctions for violations that result in fatalities. Reform of penalty levels to reflect the VSL will require increasing the current statutory limits on regulatory penalties. Revamping the penalty structure also will incentivize private companies to incorporate the VSL in their corporate risk analyses. Government agencies, including those concerned with national defense, similarly could profit from greater expansion of the use of the VSL in policy decisions.
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HARVARD JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS RACIAL DIFFERENCES IN LABOR MARKET VALUES OF A Statistical Life Racial Differences in Labor Market Values of a Statistical Life Racial Differences in Labor Market Values of a Statistical Life
2020Co-Authors: Kip W Viscusi, Jr. Professor Of Law John F Cogan, School, Hauser Economics Harvard Law, Washington D CAbstract:Abstract This article constructs measures of job fatality rates for black and white workers using information on job-related fatalities from 1992-1997. The fatality rates for black employees are somewhat greater than those for whites. Each of these groups receives significant compensating wage differentials for fatality risks, controlling for nonfatal risks and expected workers' compensation benefits. The implicit value of a Statistical Life is lower for black workers than for whites. These results in conjunction with evidence that blacks receive less annual compensation for fatality risks than do whites imply that black and white workers face different market offer curves that are flatter for blacks than for whites
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the value of a Statistical Life
2019Co-Authors: Thomas J. Kniesner, Kip W ViscusiAbstract:The value of a Statistical Life (VSL) is the local tradeoff rate between fatality risk and money. When the tradeoff values are derived from choices in market contexts the VSL serves as both a measure of the population’s willingness to pay for risk reduction and the marginal cost of enhancing safety. Given its fundamental economic role, policy analysts have adopted the VSL as the economically correct measure of the benefit individuals receive from enhancements to their health and safety. Estimates of the VSL for the United States are around $10 million ($2017), and estimates for other countries are generally lower given the positive income elasticity of the VSL. Because of the prominence of mortality risk reductions as the justification for government policies the VSL is a crucial component of the benefit-cost analyses that are part of the regulatory process in the United States and other countries. The VSL is also foundationally related to the concepts of value of a Statistical Life year (VSLY) and value of a Statistical injury (VSI), which also permeate the labor and health economics literatures. Thus, the same types of valuation approaches can be used to monetize non-fatal injuries and mortality risks that pose very small effects on Life expectancy. In addition to formalizing the concept and measurement of the VSL and presenting representative estimates for the United States and other countries our Encyclopedia selection addresses the most important questions concerning the nuances that are of interest to researchers and policymakers.
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the income elasticity of global values of a Statistical Life stated preference evidence
2018Co-Authors: Clayton J Masterman, Kip W ViscusiAbstract:Examination of estimates of the income elasticity of the value of a Statistical Life based on international stated preference studies yields an average between 0.94 and 1.05 overall and 0.65 and 0.80 after controlling for covariates. Quantile regression estimates indicate that the income elasticity is about 0.55 for more affluent counties and 1.0 for lower income nations, i.e., those countries that have estimates of the value of a Statistical Life below $2 million or per capita income levels below $3,212. The estimates distinguish the values of the income elasticity across country either by income level or by the value of a Statistical Life. These elasticities are similar to those found in revealed preference labor market studies. The estimates are robust, controlling for possible sample selection bias and the influence of covariates, such as the type of risk.
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the income elasticity of global values of a Statistical Life stated preference evidence
Journal of Benefit-cost Analysis, 2018Co-Authors: Clayton J Masterman, Kip W ViscusiAbstract:Examination of estimates of the income elasticity of the value of a Statistical Life based on international stated preference studies yields an average between 0.94 and 1.05 overall and 0.65 and 0.80 after controlling for covariates. Quantile regression estimates indicate that the income elasticity is about 0.55 for more affluent countries and 1.0 for lower income nations, i.e., those countries that have estimates of the value of a Statistical Life below 3212. The estimates distinguish the values of the income elasticity across country either by income level or by the value of a Statistical Life. These elasticities are similar to those found in revealed preference labor market studies. The estimates are robust, controlling for possible sample selection bias and the influence of covariates, such as the type of risk.
Joseph E Aldy - One of the best experts on this subject based on the ideXlab platform.
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adjusting the value of a Statistical Life for age and cohort effects
The Review of Economics and Statistics, 2008Co-Authors: Joseph E Aldy, Kip W ViscusiAbstract:Abstract To resolve the theoretical ambiguity in the effect of age on the value of Statistical Life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U-shaped relationship with age. In the year 2000 cross section, workers' VSL rises from $3.7 million (ages 18–24) to $9.7 million (35–44), and declines to $3.4 million (55–62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the age-VSL relationship. The value of Statistical Life-year also follows an inverted-U shape with age.
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adjusting the value of a Statistical Life for age and cohort effects
The Review of Economics and Statistics, 2008Co-Authors: Joseph E Aldy, Kip W ViscusiAbstract:To resolve the theoretical ambiguity in the effect of age on the value of Statistical Life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U-shaped relationship with age. In the year 2000 cross section, workers' VSL rises from $3.7 million (ages 18-24) to $9.7 million (35-44), and declines to $3.4 million (55-62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the age-VSL relationship. The value of Statistical Life-year also follows an inverted-U shape with age. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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age differences in the value of Statistical Life revealed preference evidence
Review of Environmental Economics and Policy, 2007Co-Authors: Joseph E Aldy, Kip W ViscusiAbstract:AbstractRevealed preference evidence, especially based on wage-risk tradeoffs in the labor market, provides the primary empirical basis for analyses of the value of Statistical Life (VSL). This mar...
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age differences in the value of Statistical Life revealed preference evidence
Review of Environmental Economics and Policy, 2007Co-Authors: Joseph E Aldy, Kip W ViscusiAbstract:Revealed preference evidence, especially based on wage-risk tradeoffs in the labor market, provides the primary empirical basis for analyses of the value of Statistical Life (VSL). This market evidence also provides guidance on how VSL varies with age. While labor market studies have generated conflicting evidence--some showing that VSL rises with age and others showing that VSL declines with age--more refined estimates that take into account the age variation in job fatality risks or Life-cycle patterns of consumption show an inverted U relation between the VSL and age. The value of a Statistical Life-year shows a similar pattern and is not time-invariant. Applying estimates of the VSL-age relationship to an analysis of the Clear Skies initiative illustrates the implications of recognizing the age-VSL relationship. Language: en
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labor market estimates of the senior discount for the value of Statistical Life
Journal of Environmental Economics and Management, 2007Co-Authors: Kip W Viscusi, Joseph E AldyAbstract:Abstract This article develops the first measures of age–industry job risks to examine the age variations in the value of Statistical Life. Because of the greater risk vulnerability of older workers, they face flatter wage-risk gradients than younger workers, which we show to be the case empirically. Accounting for this heterogeneity in hedonic market equilibria leads to estimates of the value of Statistical Life–age relationship that follows an inverted U shape. The estimates of the value of Statistical Life range from $6.4 million for younger workers to a peak of $9.0 million for those aged 35–44, and then a decline to $3.8 million for those aged 55–62. The decline of the estimated value of Statistical Life with age is consistent with there being some senior discount in the Clear Skies Initiative analysis.
Michael Greenstone - One of the best experts on this subject based on the ideXlab platform.
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the heterogeneous value of a Statistical Life evidence from u s army reenlistment decisions
Research Papers in Economics, 2021Co-Authors: Kyle Greenberg, Michael Greenstone, Stephen P Ryan, Michael YankovichAbstract:This paper estimates the value of a Statistical Life (VSL), or the willingness to trade-off wealth and mortality risk, among 430,000 U.S. Army soldiers choosing whether to reenlist between 2002 and 2010. Using a discrete choice random utility approach and significant variation in retention bonuses and mortality risk, we recover average VSL estimates that range between $500,000 and $900,000, an order of magnitude smaller than U.S. civilian labor market estimates. Additionally, we fulfill Rosen's (1974) vision to recover indifference curves between wealth and non-market goods (e.g., mortality risk) and document substantial heterogeneity in preferences within and across types. We find the VSL increases rapidly with mortality risk within type, and that soldiers in combat occupations have much lower VSLs than those in noncombat occupations. We estimate that the quadrupling of mortality risk from the Afghanistan and Iraq wars reduced annual welfare by $2,355 per soldier, roughly 8 percent of pay.
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the heterogeneous value of a Statistical Life evidence from u s army reenlistment decisions
National Bureau of Economic Research, 2021Co-Authors: Kyle Greenberg, Michael Greenstone, Stephen P Ryan, Michael YankovichAbstract:We estimate the value of a Statistical Life (VSL), or the willingness to trade-off wealth and mortality risk, among 430,000 U.S. Army soldiers choosing whether to reenlist from 2002-2010. Using a discrete choice random utility approach and significant variation in retention bonuses and mortality risk, we recover average VSL estimates between $500,000 and $900,000, an order of magnitude smaller than U.S. civilian labor market estimates. We then document substantial heterogeneity by recovering indifference curves between wealth and mortality risk. The VSL increases with mortality risk within type, and soldiers in combat occupations have lower VSLs than those in noncombat occupations.
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estimating the value of a Statistical Life the importance of omitted variables and publication bias
The American Economic Review, 2004Co-Authors: Orley Ashenfelter, Michael GreenstoneAbstract:Measures of public preferences toward risk are critical to evaluations of public policies on many safety, environmental, and health issues. In this paper we provide a method for measuring the revealed preferences for safety risks from state level public choices about speed limits. The idea is to measure the value of the time saved per incremental fatality that results from the voluntary adoption of an increased speed limit. Since adopters must have valued the time saved by greater speeds more than the fatalities created, this ratio provides a convincing and credible upper bound on the value of a Statistical Life (VSL).
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using mandated speed limits to measure the value of a Statistical Life
Journal of Political Economy, 2004Co-Authors: Orley Ashenfelter, Michael GreenstoneAbstract:In 1987 the federal government permitted states to raise the speed limit on their rural interstate roads, but not on their urban interstate roads, from 55 mph to 65 mph. Since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred, this institutional change provides an opportunity to estimate an upper bound on the public’s willingness to trade off wealth for a change in the probability of death. Our estimates indicate that the adoption of the 65‐mph limit increased speeds by approximately 4 percent, or 2.5 mph, and fatality rates by roughly 35 percent. Together, the estimates suggest that about 125,000 hours were saved per lost Life. When the time saved is valued at the average hourly wage, the estimates imply that adopting states were willing to accept risks that resulted in a savings of $1.54 million (1997 dollars) per fatality, with a sampling error roughly one‐third this value. We set out a simple model of states' decisions to adop...
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using mandated speed limits to measure the value of a Statistical Life
Journal of Political Economy, 2004Co-Authors: Orley Ashenfelter, Michael GreenstoneAbstract:In 1987 the federal government permitted states to raise the speed limit on their rural interstate roads, but not on their urban interstate roads, from 55 mph to 65 mph. Since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred, this institutional change provides an opportunity to estimate an upper bound on the public's willingness to trade off wealth for a change in the probability of death. Our estimates indicate that the adoption of the 65-mph limit increased speeds by approximately 4 percent, or 2.5 mph, and fatality rates by roughly 35 percent. Together, the estimates suggest that about 125,000 hours were saved per lost Life. When the time saved is valued at the average hourly wage, the estimates imply that adopting states were willing to accept risks that resulted in a savings of $1.54 million (1997 dollars) per fatality, with a sampling error roughly one-third this value. We set out a simple model of states' decisions to adopt the 65-mph limit that turns on whether their savings exceed their value of a Statistical Life. The empirical implementation of this model supports the claim that $1.54 million is an upper bound, but it provides imprecise estimates of the value of a Statistical Life.
Thomas J. Kniesner - One of the best experts on this subject based on the ideXlab platform.
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the value of a Statistical Life
2019Co-Authors: Thomas J. Kniesner, Kip W ViscusiAbstract:The value of a Statistical Life (VSL) is the local tradeoff rate between fatality risk and money. When the tradeoff values are derived from choices in market contexts the VSL serves as both a measure of the population’s willingness to pay for risk reduction and the marginal cost of enhancing safety. Given its fundamental economic role, policy analysts have adopted the VSL as the economically correct measure of the benefit individuals receive from enhancements to their health and safety. Estimates of the VSL for the United States are around $10 million ($2017), and estimates for other countries are generally lower given the positive income elasticity of the VSL. Because of the prominence of mortality risk reductions as the justification for government policies the VSL is a crucial component of the benefit-cost analyses that are part of the regulatory process in the United States and other countries. The VSL is also foundationally related to the concepts of value of a Statistical Life year (VSLY) and value of a Statistical injury (VSI), which also permeate the labor and health economics literatures. Thus, the same types of valuation approaches can be used to monetize non-fatal injuries and mortality risks that pose very small effects on Life expectancy. In addition to formalizing the concept and measurement of the VSL and presenting representative estimates for the United States and other countries our Encyclopedia selection addresses the most important questions concerning the nuances that are of interest to researchers and policymakers.
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Willingness to accept equals willingness to pay for labor market estimates of the value of a Statistical Life
Journal of Risk and Uncertainty, 2014Co-Authors: Thomas J. Kniesner, W. Kip Viscusi, James P. ZiliakAbstract:Our research clarifies the conceptual linkages among willingness to pay for additional safety, willingness to accept less safety, and the value of a Statistical Life (VSL). We present econometric estimates using panel data to analyze the VSL levels associated with job changes that may affect the worker’s exposure to fatal injury risks. Our baseline VSL estimates are $7.7 million and $8.3 million (Y$2001). There is no Statistically significant divergence between willingness-to-accept VSL estimates associated with wage increases for greater risks and willingness-to-pay VSL estimates as reflected in wage changes for decreases in risk. Our focal result contrasts with the literature documenting a considerable asymmetry in tradeoff rates for increases and decreases in risk. An important implication for policy is that it is reasonable to use labor market estimates of VSL as a measure of the willingness to pay for additional safety.
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the value of a Statistical Life evidence from panel data
The Review of Economics and Statistics, 2012Co-Authors: Kip W Viscusi, Thomas J. Kniesner, Christopher Woock, James P. ZiliakAbstract:Our research addresses fundamental long-standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of Statistical Life (VSL) and the wide range of such estimates from about $0 to almost $30 million. Here we address most of the prominent econometric issues by applying panel data, a new and more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity that may be correlated with the regressors, state dependence, and sample composition yields an estimated value of a Statistical Life of about $7 million–$12 million, which we show can clarify greatly the cost-effectiveness of regulatory decisions. We show that probably the most important econometric issue is controlling for latent heterogeneity; less important is how one does it.
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the value of a Statistical Life evidence from panel data
The Review of Economics and Statistics, 2012Co-Authors: Thomas J. Kniesner, Kip W Viscusi, Christopher Woock, James P. ZiliakAbstract:Abstract We address long-standing concerns in the literature on compensating wage differentials: the econometric properties of the estimated value of Statistical Life (VSL) and the wide range of such estimates. We confront prominent econometric issues using panel data, a more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity possibly correlated with regressors, state dependence, and sample composition yields VSL estimates of $4 million to $10 million. The comparatively narrow range clarifies the cost-effectiveness of regulatory decisions. Most important econometrically is controlling for latent heterogeneity; less important is how one does it.
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the value of a Statistical Life evidence from panel data
2011Co-Authors: Kip W Viscusi, Thomas J. Kniesner, Christopher Woock, James P. ZiliakAbstract:This article addresses fundamental long-standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of Statistical Life (VSL) and the wide range of such estimates. Here we address most of the prominent econometric issues using panel data, a new and more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity that may be correlated with the regressors, state dependence, and sample composition yields estimates of the value of a Statistical Life in the range of about $6 million to $10 million. This comparatively narrow range greatly clarifies the assessments of the cost-effectiveness of regulatory decisions. We show that probably the most important econometric issue is controlling for latent heterogeneity; less important is how one does it.
James P. Ziliak - One of the best experts on this subject based on the ideXlab platform.
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Willingness to accept equals willingness to pay for labor market estimates of the value of a Statistical Life
Journal of Risk and Uncertainty, 2014Co-Authors: Thomas J. Kniesner, W. Kip Viscusi, James P. ZiliakAbstract:Our research clarifies the conceptual linkages among willingness to pay for additional safety, willingness to accept less safety, and the value of a Statistical Life (VSL). We present econometric estimates using panel data to analyze the VSL levels associated with job changes that may affect the worker’s exposure to fatal injury risks. Our baseline VSL estimates are $7.7 million and $8.3 million (Y$2001). There is no Statistically significant divergence between willingness-to-accept VSL estimates associated with wage increases for greater risks and willingness-to-pay VSL estimates as reflected in wage changes for decreases in risk. Our focal result contrasts with the literature documenting a considerable asymmetry in tradeoff rates for increases and decreases in risk. An important implication for policy is that it is reasonable to use labor market estimates of VSL as a measure of the willingness to pay for additional safety.
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the value of a Statistical Life evidence from panel data
The Review of Economics and Statistics, 2012Co-Authors: Kip W Viscusi, Thomas J. Kniesner, Christopher Woock, James P. ZiliakAbstract:Our research addresses fundamental long-standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of Statistical Life (VSL) and the wide range of such estimates from about $0 to almost $30 million. Here we address most of the prominent econometric issues by applying panel data, a new and more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity that may be correlated with the regressors, state dependence, and sample composition yields an estimated value of a Statistical Life of about $7 million–$12 million, which we show can clarify greatly the cost-effectiveness of regulatory decisions. We show that probably the most important econometric issue is controlling for latent heterogeneity; less important is how one does it.
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the value of a Statistical Life evidence from panel data
The Review of Economics and Statistics, 2012Co-Authors: Thomas J. Kniesner, Kip W Viscusi, Christopher Woock, James P. ZiliakAbstract:Abstract We address long-standing concerns in the literature on compensating wage differentials: the econometric properties of the estimated value of Statistical Life (VSL) and the wide range of such estimates. We confront prominent econometric issues using panel data, a more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity possibly correlated with regressors, state dependence, and sample composition yields VSL estimates of $4 million to $10 million. The comparatively narrow range clarifies the cost-effectiveness of regulatory decisions. Most important econometrically is controlling for latent heterogeneity; less important is how one does it.
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the value of a Statistical Life evidence from panel data
2011Co-Authors: Kip W Viscusi, Thomas J. Kniesner, Christopher Woock, James P. ZiliakAbstract:This article addresses fundamental long-standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of Statistical Life (VSL) and the wide range of such estimates. Here we address most of the prominent econometric issues using panel data, a new and more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity that may be correlated with the regressors, state dependence, and sample composition yields estimates of the value of a Statistical Life in the range of about $6 million to $10 million. This comparatively narrow range greatly clarifies the assessments of the cost-effectiveness of regulatory decisions. We show that probably the most important econometric issue is controlling for latent heterogeneity; less important is how one does it.
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policy relevant heterogeneity in the value of Statistical Life new evidence from panel data quantile regressions
Journal of Risk and Uncertainty, 2010Co-Authors: Kip W Viscusi, Thomas J. Kniesner, James P. ZiliakAbstract:We examine differences in the value of Statistical Life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected Life saved cut-off for health and safety regulations is $7 million to $8 million per Life saved, but the VSL varies considerably across the labor force. Our results reconcile the previous discrepancies between hedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time.
