Policy relevant heterogeneity in the value of statistical life: New evidence from panel data quantile regressions

Kniesner, Thomas J.; Viscusi, W. Kip; Ziliak, James P.

doi:10.1007/s11166-009-9084-y

Cited by 127 publications

(88 citation statements)

References 27 publications

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“…The first paper in the symposium volume, by Kniesner et al (2010) examines the heterogeneity of labor market estimates of VSL, providing insight into the effects of both income and risk levels on VSL. The article introduces a new econometric method to the VSL literature by employing quantile regression estimates of panel wage equations based on recently developed econometric methods that control for individual heterogeneity in the intercept of quantile regressions.…”

Section: Overview Of Conference Papers In This Issuementioning

confidence: 99%

The heterogeneity of the value of statistical life: Introduction and overview

Viscusi

2009

J Risk Uncertain

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The refinement in worker fatality risk data used in hedonic wage studies and evidence from new stated preference studies have facilitated the exploration of the heterogeneity of the value of statistical life (VSL). Although the median VSL estimate for workers is $7-$8 million, the VSL varies considerably within the worker population. New estimates of the income elasticity of VSL are 1.0 or above, which are consistent with theoretical models linking VSL to the coefficient of relative risk aversion. The specific relationship between VSL and risk aversion is, however, more complex than previously understood. Age differences in VSL are substantial, with young children being accorded especially high VSL amounts. The public's willingness to pay to reduce risks is reduced if those being protected are perceived as being blameworthy due to their responsibility for contributing to the risk.Keywords Value of statistical life . Fatality risk . VSL . Income elasticity . Blame . Children JEL Classification I10 . J17 . J28 . K00 . C23The value of statistical life (VSL) is not a natural constant. Individuals' risk-money tradeoffs vary across the population and also vary over time for particular individuals as their age and economic circumstances change. The heterogeneity of VSL has become more prominent both in terms of economics research and risk policy. Much of the research on the heterogeneity of VSL has been stimulated by the J Risk Uncertain (2010) 40:1-13

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Section: Overview Of Conference Papers In This Issuementioning

confidence: 99%

The heterogeneity of the value of statistical life: Introduction and overview

Viscusi

2009

J Risk Uncertain

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“…2 Costa and Kahn [2004] estimate an income elasticity for the VSL of about 1.5 and Kniesner et al [2010] estimate income elasticities greater than 1.0 from hedonic labor market analyses, although meta-analyses by Viscusi and Aldy [2003], Mrozek and Taylor [2002], and Liu and Liu [1997] produce income elasticities in the 0.4 and 0.6 range and Cameron and DeShazo [2013] estimate an income elasticity of about 0.7 based on a stated preference survcey. Viscusi [2004] and Leeth and Ruser [2003] estimate larger VSLs for whites than for blacks in the labor market.…”

Section: Introductionmentioning

confidence: 99%

Heterogeneity in the Value of Life

Aldy¹,

Smyth

2014

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We develop a numerical life-cycle model with choice over consumption and leisure, stochastic mortality and labor income processes, and calibrated to U.S. data to characterize willingness to pay (WTP) for mortality risk reduction. Our theoretical framework can explain many empirical findings in this literature, including an inverted-U life-cycle WTP and an order of magnitude difference in primeaged adults WTP. By endogenizing leisure and employing multiple income measures, we reconcile the literature's large variation in estimated income elasticities. By accounting for gender-and racespecific stochastic mortality and income processes, we explain the literature's black-white and femalemale differences.

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“…A much more substantial estimate of the income elasticity is reported in Kniesner et al (2010), who use quantile estimates using the PSID data on worker wages in conjunction with CFOI fatality risk data by industry and age. They estimate a mean income elasticity across the different quantiles of 1.44.…”

Section: Income Effectsmentioning

confidence: 99%

Policy Challenges of the Heterogeneity of the Value of Statistical Life

Viscusi

2011

SSRN Journal

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article published in economics journalEconomic research has developed estimates of the heterogeneity of the value of statistical life (VSL) on dimensions such as individual age, income, immigrant status, and the nature of the risk exposure. This paper examines the empirical evidence on the heterogeneity of VSL and explores the potential implications for the valuation of regulatory policies. Previously, the U.S. Environmental Protection Agency (EPA) unsuccessfully sought to adopt a simple age discount percentage for VSL based on survey evidence. However, labor market estimates of VSL indicate a pattern that tracks lifetime consumption trajectories, as the VSL rises with age and eventually tapers off but does not plummet with age. The VSL has an income elasticity of at least 0.5. The analysis of age variations in VSL is accompanied by a review of the value of statistical life year (VSLY) approach. The U.S. Department of Transportation recognizes the influence of a positive income elasticity of VSL, and EPA has proposed adopting a 50% cancer premium. Recent studies suggest that the risk of death from terrorist attacks are of particular concern and may merit a substantial premium in benefit assessments. Whether and how such heterogeneity in VSL should be incorporated in regulatory policy evaluations depends in part on the source of the heterogeneity. Some prominent sources of heterogeneity arise from segmented labor markets in which disadvantaged groups face different labor market opportunities. Blacks and Mexican immigrants face quite different labor market offer curves. As a result, influences that are problematic from the standpoint of setting different benefit levels for policy purposes are differences in VSL by race and immigrant status. The paper also examines the EPA’s recent devaluation of life and the Posner–Sunstein proposal to use VSL estimates to set hedonic damages in tort liability cases. As with hedonic damages generally, adoption of their proposal would lead to excessive levels of compensatory damages and would greatly increase damage amounts

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Policy relevant heterogeneity in the value of statistical life: New evidence from panel data quantile regressions

Abstract: Value of statistical life, VSL, Quantile regression, Panel data, Fixed effects, PSID, Fatality risk, CFOI, JEL Classification , C23, I10, J17, J28, K00,

Cited by 127 publications

References 27 publications

The heterogeneity of the value of statistical life: Introduction and overview

The heterogeneity of the value of statistical life: Introduction and overview

Heterogeneity in the Value of Life

Policy Challenges of the Heterogeneity of the Value of Statistical Life

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