A Valuation Question: “Value of a Statistical Life? $9.1 Million”
Some recent reading reminded me that the Conversable Economist blog includes an October 23, 2013 post that provides a very useful discussion of some of the issues and data tied up in trying to value a life for purposes of statistics. It begins as follows, and includes much more.
“The costs of regulations can be measured by the money that must be spent for compliance. But many of the benefits of regulation are measured by lives saved or injuries avoided. Thus, comparing costs and benefits requires putting some kind of a monetary value on the reduction of risks to life and limb. For example, the US Department of Transportation estimates the “value of a statistical life” at $9.1 million in 2012. In a memo called “Guidance on Treatment of the Economic Value of a Statistical Life in the U.S. Department of Transportation Analyses,” it explains how this number was reached. I’ll run through the DoT estimates, and then raise some of the broader issues as discussed in a recent paper by Cass Sunstein called “The value of a statistical life: some clarifications and puzzles,” which appeared in a recent issue of the Journal of Benefit Cost Analysis (4:2, pp. 237-261).”