Abstract
The benefit-cost study of the Clean Air Act conducted by the EPA a decade ago found that the benefit from that act far exceeds its cost. However, 85% of that benefit came from the EPA's valuation of the lives saved by the act. This valuation was based on estimates of the statistical value of a life, the majority of which were made using a hedonic wage equation. The analysis presented here shows that such a valuation may not accurately capture willingness to pay for improved air quality. In fact, it is only capable of doing so in a very special case, when air quality does not affect the probability of developing non-fatal conditions.
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Notes
See Bockstael and McConnell (2007), Chapter 7 for a review of hedonic wage models.
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Neill, J.R. Using the Value of a Statistical Life to Measure the Benefit from the Clean Air Act: Comment. Atl Econ J 52, 39–44 (2024). https://doi.org/10.1007/s11293-024-09796-x
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DOI: https://doi.org/10.1007/s11293-024-09796-x