A Handbook of Transport Economics
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A Handbook of Transport Economics

Edited by André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman

Bringing together insights and perspectives from close to 70 of the world’s leading experts in the field, this timely Handbook provides an up-to-date guide to the most recent and state-of-the-art advances in transport economics. The comprehensive coverage includes topics such as the relationship between transport and the spatial economy, recent advances in travel demand analysis, the external costs of transport, investment appraisal, pricing, equity issues, competition and regulation, the role of public–private partnerships and the development of policy in local bus services, rail, air and maritime transport.
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Chapter 17: The Value of a Statistical Life

Henrik Andersson and Nicolas Treich


Henrik Andersson and Nicolas Treich INTRODUCTION Modern societies rely on a well-functioning transportation infrastructure. Policies taken to maintain and/or improve an infrastructure come at a cost; and the scarcity of resources forces policy makers to prioritize between policies. The use of a common metric for benefits and costs may facilitate the evaluation of different policies, which in turn, enables policy makers to allocate resources more efficiently. Monetary values often act as this common metric. Another good reason for monetizing non-marketed goods is that this common ground for comparisons makes the prioritization process more transparent to those not directly involved in the process (for example, the public). Many of the benefits and costs induced by policies within the transport sector have monetary values. Material expenditures, for example, for road improvements in order to increase safety and reduce travel time, are easily obtainable since the materials are traded on markets and have market prices. However, many of the costs are not ‘construction costs’ and do not have monetary market prices. For instance, road improvements might increase road traffic, resulting in increased noise and emission levels; in addition, when a new road is constructed recreation areas may be lost, wildlife may be adversely affected and so forth. Similarly, whereas expected benefits from avoided material damage caused by crashes can be calculated using available market prices, the benefits from a reduced risk exposure and/or a reduced travel time have no market prices. In this chapter, we are interested in the monetary value of increased...

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