Does Increased Safety Have to Reduce Efficiency?
Edited by Carol Mansfield and V. K. Smith
Chapter 4: The heterogeneity of the value of statistical life: evidence and policy implications
The value of a statistical life (VSL) is a measure of individuals’ money–risk trade-off and is the most widely used economic measure for valuing changes in risk. The academic literature includes dozens of labor market studies of VSL. There have also been studies of VSL based on price–risk trade-off for the product market as well as risk-taking decisions ranging from choice of highway speed to use of seat belts. This chapter focuses on the variation in the VSL both across different studies in the academic literature and in different policy contexts. There are important differences in the VSL with respect to individual risk-taking behaviors as well as personal characteristics, including age, income, race, gender and immigrant status. What are these differences and what are the policy implications for benefit assessment? To assess such issues, I explore both the VSL estimates themselves and their implications for the structure of labor markets.
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