Summary and Keywords
The value of a statistical life (VSL) is the local tradeoff rate between fatality risk and money. When the tradeoff values are derived from choices in market contexts the VSL serves as both a measure of the population’s willingness to pay for risk reduction and the marginal cost of enhancing safety. Given its fundamental economic role, policy analysts have adopted the VSL as the economically correct measure of the benefit individuals receive from enhancements to their health and safety. Estimates of the VSL for the United States are around $10 million ($2017), and estimates for other countries are generally lower given the positive income elasticity of the VSL. Because of the prominence of mortality risk reductions as the justification for government policies the VSL is a crucial component of the benefit-cost analyses that are part of the regulatory process in the United States and other countries. The VSL is also foundationally related to the concepts of value of a statistical life year (VSLY) and value of a statistical injury (VSI), which also permeate the labor and health economics literatures. Thus, the same types of valuation approaches can be used to monetize non-fatal injuries and mortality risks that pose very small effects on life expectancy. In addition to formalizing the concept and measurement of the VSL and presenting representative estimates for the United States and other countries our Encyclopedia selection addresses the most important questions concerning the nuances that are of interest to researchers and policymakers.
Access to the complete content on Oxford Research Encyclopedia of Economics and Finance requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.
If you have purchased a print title that contains an access token, please see the token for information about how to register your code.