Journal of Risk and Uncertainty

, Volume 40, Issue 1, pp 15–31

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

Authors

    • Senior Research Associate, Center for Policy ResearchSyracuse University
    • IZA
  • W. Kip Viscusi
    • University Distinguished Professor of Law, Economics, and ManagementVanderbilt University
  • James P. Ziliak
    • Carol Martin Gatton Chair in Microeconomics, Center for Poverty ResearchUniversity of Kentucky
Article

DOI: 10.1007/s11166-009-9084-y

Cite this article as:
Kniesner, T.J., Viscusi, W.K. & Ziliak, J.P. J Risk Uncertain (2010) 40: 15. doi:10.1007/s11166-009-9084-y

Abstract

We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is $7 million to $8 million per life saved, but the VSL varies considerably across the labor force. Our results reconcile the previous discrepancies between hedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time.

Keywords

Value of statistical lifeVSLQuantile regressionPanel dataFixed effectsPSIDFatality riskCFOI
JEL ClassificationC23I10J17J28K00

Copyright information

© Springer Science+Business Media, LLC 2009