The Indian Journal of Labour Economics

, Volume 60, Issue 4, pp 527–548 | Cite as

Compensating wage differential and value of statistical life: a meta-analysis

  • Agamoni Majumder
  • S. Madheswaran


The analysis of safety and health regulations often involves assigning a monetary value to the reduction of fatal risks to health. This is done based on how people are compensated for undertaking various risks. Compensating Wage Differential (CWD) for job risks is key when valuing fatality risks. The Value of Statistical Life (VSL) acts as the foundations when analysing the benefits of various risk reduction policies of the government. However, VSL estimates are observed to vary considerably across various studies. The source of this variability must be understood to guide present and future policy-making endeavours. This article presents a meta-analysis based on 34 observations from 30 VSL studies, which have used the hedonic wage method to estimate VSL. This meta-analysis suggests that the emerging areas, such as the effect of a worker’s age, compensation benefits and long-term, health-related job risks need to be explored further when estimating the VSL.


Value of statistical life Compensating wage differentials Hedonic wage method Meta-analysis 


  1. Alberini, A., A Krupnick, M. Cropper, N.B. Simon and J. Cook (2001), “The Willingness To Pay for Mortality Risk Reductions: A Comparison of the United States and Canada”, Working Paper No. 92, FEEM Research Paper Series, FondazioneEni Enrico Mattei, Milan.Google Scholar
  2. Aldy, J.E. and W.K. Viscusi (2004), “Age Variations in Workers’ Value of Statistical Life”, Discussion Paper No. 468, Harvard Law School, Cambridge.Google Scholar
  3. Aldy, J.E. and W.K. Viscusi (2006), “Adjusting the Value of a Statistical Life for Age and Cohort Effects”, The Review of Economics and Statistics, Vol. 90, No. 3, pp. 573–581.CrossRefGoogle Scholar
  4. Aldy, J.E. and W.K. Viscusi (2007), “Age Differences in the Value of Statistical Life: Revealed Preference Evidence”, Review of Environmental Economics and Policy, Vol. 1, No. 2, pp. 24–260.CrossRefGoogle Scholar
  5. Aldy, J.E. and W.K. Viscusi (2008), “Adjusting the value of a statistical life for age and cohort effects”, The Review of Economics and Statistics, Vol. 90, No. 3, pp. 57–581.Google Scholar
  6. Banzhaf, S.H. (2014), “The Cold-War Origins of Value of a Statistical Life”, Journal of Economic Perspectives, Vol. 28, pp. 213–226.CrossRefGoogle Scholar
  7. Bellavance, F., G. Dionne and M. Lebeau (2009), “The Value of a Statistical Life: A Meta-Analysis with a mixed effects regression model”, Journal of Health Economics, Vol. 28, No. 2, pp. 444–464.CrossRefGoogle Scholar
  8. Blomquist, G.C. (2004), “Self-Protection and Averting Behaviour, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy”, Review of Economics of the Household, Vol. 2, No. 1, pp. 89–110.Google Scholar
  9. Borjas, G.J. (2013), “Labour Economics”, 6th Edition, Harvard University, McGraw-Hill, New York. pp. 20–234.Google Scholar
  10. Bowland, B.J. and J.C. Beghin (2001), “Robust estimates of value of a statistical life for developing economies”, Journal of Policy Modeling, Vol. 23, No. 4, pp. 385–396.Google Scholar
  11. Brannon, I. (2004-05), “What Is a Life Worth?”, U.S. Congress, Regulation Winter 2004–2005.Google Scholar
  12. Costa, D.L. and M.E. Kahn (2004), “Changes in the Value of Life, 1940–1980”, The Journal of Risk and Uncertainty, Vol. 29, No. xx, pp. 159–180.Google Scholar
  13. Council of Economic Advisers (2013), Economic Report of the President, Government Printing Office, Washington D.C.Google Scholar
  14. India Labour Market Update (2017), International Labour Organization, Available on Accessed 14 Mar 2018.
  15. Kniesner, T.J., W.K. Viscusi and J.P. Ziliak (2014), “Willingness to accept equals willingness to pay for labour market estimates of the value of a statistical life”, The Journal of Risk and Uncertainty, Vol. 48, No. xx, pp. 187–205.Google Scholar
  16. Krupnick, A. (2007), “Mortality-risk Valuation and Age: Stated Preference Evidence”, Review of Environmental Economics and Policy, Vol. 1, No. xx, pp. 261–282.Google Scholar
  17. Liu, J.T., J.K. Hammitt and J.L. Liu (1997), “Estimated hedonic wage function and value of a statistical life in a developing country”, Economics Letters, Vol. 57, No. 3, pp. 353–358.CrossRefGoogle Scholar
  18. Madheswaran, S. (2004), “Measuring the Value of Life and Limb: Estimating Compensating Wage Differentials among Workers in Chennai and Mumbai”, Working Paper No. 9-04, South Asian Network for Development and Environmental Economics (SANDEE), Kathmandu.Google Scholar
  19. Miller, T.R. (2000), “Variations between countries in values of statistical life”, Journal of Transport Economics and Policy, Vol. 34, No. 2, pp. 169–188.Google Scholar
  20. Mrozek, J.R. and L.O. Taylor (2002), “What determines the value of a statistical life? Ameta-analysis”, Journal of Policy Analysis and Management, Vol. 21, No. 2, pp. 253–270.CrossRefGoogle Scholar
  21. Penn World Table 7.1 (2012), University of Pennsylvania, Available on Accessed 23 Apr 2016.
  22. Raudenbush, S. W. (1994). “Analyzing Effect Sizes: Random-Effects Models”. Part VI, H. Cooper & L. V. Hedges (Eds.), The handbook of research synthesis and meta-analysis. pp. 295–316. New York, NY: Russel Sage Foundation.Google Scholar
  23. Sceptical Economist (2014), “The Economic Value of a Statistical Life”, Available on Accessed 14 June 2015.
  24. Schelling, T. C. (1968). “The life you save may be your own”. S. B. Chase, Jr. (Ed.), Problems in public expenditure analysis, pp. 127–162. Washington, DC: The Brookings Institution.Google Scholar
  25. Shanmugam, K.R. and S. Madheswaran (2011), “The Value of Statistical Life”, in A.K. Enamul Haque, M.N. Murty and Priya Shyamsundar (eds.), Environmental Valuation in South Asia, Cambridge University Press, pp. 412–437.Google Scholar
  26. Shanmugam, K.R. (2013), “Value of Statistical Life”, Dissemination Paper-27, Centre of Excellence in Environmental Economics, Madras School of Economics, Chennai.Google Scholar
  27. Simon, N., M.A. Cropper, A. Alberini and S. Arora (1999), “Valuing Mortality Reductions in India: A Study of Compensating Wage Differentials”, World Bank Working Paper, World Bank, Washington D.C.Google Scholar
  28. Viscusi, W.K. (2003), “Racial Differences in Labour Market Values of a Statistical Life”, Discussion Paper No. 418, Economics and Business Discussion Paper Series, Harvard Law School John M. Olin Center for Law.Google Scholar
  29. Viscusi, W.K. (2011), “Policy Challenges of the Heterogeneity of the Value of Statistical Life”, Foundations and Trends® in Microeconomics, Vol. 6, No. 2, pp. 99–172.Google Scholar
  30. Viscusi, W.K. and J.E. Aldy (2003), “The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World”, The Journal of Risk and Uncertainty, Vol. 27, No. 1, pp. 5–76.CrossRefGoogle Scholar
  31. Viscusi, W.K. and J. Hersch (2001), “Cigarette Smokers as Job Risk Takers”, Review of Economics and Statistics, Vol.83, No. 2, pp. 26–280.CrossRefGoogle Scholar

Copyright information

© Indian Society of Labour Economics 2018

Authors and Affiliations

  1. 1.Centre for Economic Studies and PolicyInstitute for Social and Economic ChangeBangaloreIndia

Personalised recommendations