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An Empirical Bayes Approach to Combining and Comparing Estimates of the Value of a Statistical Life for Environmental Policy Analysis

Abstract

An empirical Bayes pooling method is used to combine and compare estimates of the value of a statistical life (VSL). The data come from 40 selected studies published between 1974 and 2002, containing 197 VSL estimates. The estimated composite distribution of empirical Bayes adjusted VSL has a mean of $5.4 million and a standard deviation of $2.4 million. The empirical Bayes method greatly reduces the variability around the pooled VSL estimate. The pooled VSL estimate is influenced by the choice of valuation method, study location, and union status of sample but not to the source of data on occupational risk or the consideration of non-fatal risk injury.

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Correspondence to Randall Kramer.

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Without implicating them for remaining errors, the authors thank Joe Aldy, Jim Hammitt, David Higdon, Marty Smith, and Kerry Smith for comments on an earlier draft of this manuscript.

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Kochi, I., Hubbell, B. & Kramer, R. An Empirical Bayes Approach to Combining and Comparing Estimates of the Value of a Statistical Life for Environmental Policy Analysis. Environ Resource Econ 34, 385–406 (2006). https://doi.org/10.1007/s10640-006-9000-8

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  • DOI: https://doi.org/10.1007/s10640-006-9000-8

Keywords

  • value of a statistical life (VSL)
  • empirical Bayes estimate
  • environmental policy
  • health policy
  • contingent valuation method
  • hedonic wage method

JEL Classification

  • J17
  • C11
  • Q28