The economic value of life: linking theory to practice.

Abstract

Human capital estimates of the economic value of life have been routinely used in the past to perform cost-benefit analyses of health programs. Recently, however, serious questions have been raised concerning the conceptual basis for valuing human life by applying these estimates. Most economists writing on these issues tend to agree that a more conceptually correct method to value risks to human life in costbenefit analyses would be based on individuals' "willingness to pay" for small changes in their probability of survival. Attempts to implement the willingness-topay approach using survey responses or revealedpreference estimates have produced a confusing array of values fraught with statistical problems and measurement difficulties. As a result, economists have searched for a link between willingness to pay and standard human capital estimates and have found that for most individuals a lower bound for valuing risks to life can be based on their willingness to pay to avoid the expected economic losses associated with death. However, while these studies provide support for using individual's private valuation of forgone income in valuing risks to life, it is also clear that standard human capital estimates cannot be used for this purpose without reformulation. After reviewing the major approaches to valuing risks to life, this paper concludes that estimates based on the human capital approach-reformulated using a willingness-to-pay criterion-produce the only clear, consistent, and objective values for use in cost-benefit analyses of policies affecting risks to life. The paper presents the first empirical estimates of such adjusted willingness-topay/human capital values.

Cumulative injury rate and potential workdays and salary lost

“…Nevertheless, adjustment for some key factors influencing a worker's income, such as industry, occupation, education, and the like can also be further taken into account and factored into the equations (17). Although this approach, based on the method of human capital, may not be so convincing as the estimation from the method of "willingness to pay" (18), it can be considered as its lower limit (13) and still provides us with a direct and quick tool for counting the potential monetary cost for occupational injuries.…”

Haemorrhage of gross domestic product from disability-adjusted-life-years among 15-59 year olds in Kenya

“…The approach was first used in 1699 [21], and its theoretical underpinnings honed in subsequent studies [22,23,24,24]. The availability of data on DALYs, total health expenditure per capita and GDP per capita for Kenya influenced our choice of HCA.…”

“…Kenya's non-health GDP haemorrhage (NHGDPHA) associated with DALYs lost from k th disease (or health condition) is the sum of the NHGDPHA due to DALYs lost from k th disease among people aged 15-29 years (NHGDPA [15][16][17][18][19][20][21][22][23][24][25][26][27][28][29] ), 30-49 years (NHGDPA [30][31][32][33][34][35][36][37][38][39][40][41][42][43][44][45][46][47][48][49] ), and 50-59 years (NHGDPA [50][51][52][53][54][55][56][57][58][59] )…”

“…Fourth, if the HCA strictly is applied, the DALYs lost by the unemployed and full-time homemakers would be valued at zero [23,97,98]. In order to alleviate the impact of this limitation, the current study valued all the DALYs lost using the same per capita GDP, without adjusting for employment rates.…”

Humility and The Gift: The Elective Affinity of Institutions and Ethics in Orthodox Parishes

“…Преимущество подхода «готовность платить» состоит в возможности получения субъективной обще-ственной оценки стоимости жизни населения страны. Также метод является одним из наиболее удоб-ных и практичных для применения в социальной политике, так как результаты расчётов позволяют распределить ограниченные государственные финансовые ресурсы более рационально и эффективно, что способствует максимизации общественного благосостояния [Landefeld, Seskin 1982]. Так, при ин-вестиционных решениях учитываются желаемые результаты инвестиционных вложений (например, снижение рисков от смерти и угрозы качеству жизни населения страны), определённые цели достиже-ния (например, достижение равенства и социальной справедливости) и контекст (например, ситуации масштабных катастроф, авиакатастроф и ДТП) [Richardson 1999].…”