Skip to main content
SpringerLink
Log in

Using Estimates of the Value of a Statistical Life in Evaluating Consumer Policy Regulations

  • Published:
Journal of Consumer Policy Aims and scope Submit manuscript

Abstract

This paper is a critical review of current practice for the economic evaluation of the life-saving benefits of U.S. consumer policy regulations. Selected evaluations conducted by the U.S. Environmental Protection Agency, the Economic Research Service of the U.S. Department of Agriculture, and the U.S. Food and Drug Administration are briefly reviewed. The standard approach to placing a dollar value on the life-saving benefits of regulations is based on societal willingness to pay for mortality risk reductions, conveniently summarized as the value of a statistical life (VSL). The paper proposes a common-sense rule for improving current practice: Different agencies reducing similar health risks for similar populations should use consistent estimates of the VSL, but each agency should use VSL estimates that are specific to the health risk and population affected by its regulations. Developing VSL estimates that vary by cause of death and that reflect differences in willingness to pay due to age, income, and risk preferences poses a challenge for both the research community that generates VSL estimates and policymakers.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

REFERENCES

  • Benjamin, D. K., & Dougan, W. R. (1997). Individuals' estimates of risks of death: Part I: A reassessment of the previous evidence. Journal of Risk and Uncertainty, 15, 115–133.

    Google Scholar 

  • Blomquist, G. C. (2001a). Self protection and averting behavior, values of statistical lives, and benefit cost analysis of environmental policy. Paper prepared for “Economic Valuation of Mortality Risk Reduction: Assessing the State of the Art for Policy Applications,” an Environmental Policy and Economics Workshop held by the U.S. Environmental Protection Agency in Silver Spring, Maryland, November 6–7, 2001.

  • Blomquist, G. C. (2001b). Value of life, economics of. International Encyclopedia of the Social and Behavioral Sciences, pp. 16132–16139. New York, Pergamon Press.

    Google Scholar 

  • Blomquist, G. C., Miller, T. R., & Levy, D. T. (1996). Values of risk reduction implied by motorist use of protection equipment. Journal of Transport Economics and Policy, 30, 55–66.

    Google Scholar 

  • Buzby, J. C., & Roberts, T. (1997). Guillain-Barre' syndrome increases food borne disease costs. Food Review, 20, 36–42.

    Google Scholar 

  • Buzby, J. C., Roberts, T., Lin, C.-T. J., & MacDonald, J. M. (1996). Bacterial food borne disease: Medical costs and productivity losses. Washington, DC: U.S. Department of Agriculture. Economic Research Service Report Number 741.

    Google Scholar 

  • Carlin, P., & Sandy, R. (1991). Estimating the implicit value of a young child's life. Southern Economic Journal, 58, 186–202.

    Google Scholar 

  • Chapman, R. H., Stone, P. W., Sandberg, E. E., Bell, C., & Neuman, P. J. (2000). A comprehensive league table of cost-utility ratios and a sub-table of “panel-worthy” studies. Medical Decision Making, 20, 451–467.

    Google Scholar 

  • Cropper, M. L. (1977). Health, investment in health, and occupational choice. Journal of Political Economy, 85, 1273–1294.

    Google Scholar 

  • Cropper, M. L., Aydede, S. K., & Portney, P. R. (1994). Preferences for life saving programs: How the public discounts time and age. Journal of Risk and Uncertainty, 8, 243–265.

    Google Scholar 

  • Crutchfield, S., Buzby, J. C., Roberts, T., Ollinger, M., & Lin, C.-T. J. (1997). An economic assessment of food safety regulations: The new approach to meat and poultry inspection. Washington, DC: U.S. Department of Agriculture. Economic Research Service Report Number 755.

    Google Scholar 

  • Cutler, D. M., & Richardson, E. (1997). Measuring the health benefits of the U.S. population. Brookings Papers on Economic Activity: Microeconomics, 217–271.

  • Desvousges, W. H., Johnson, F. R., & Banzhaf, H. S. (1998). Environmental policy analysis with limited information, principles and applications of the transfer method. Northampton: Edward Elgar.

    Google Scholar 

  • EPA (1997). The benefits and costs of the Clean Air Act: 1970–1990. Washington, DC: U.S. Environmental Protection Agency. 410-R–97–002.

    Google Scholar 

  • EPA (1998). National primary drinking water regulations: Disinfectants and disinfection by products: Final Rule. Federal Register, December 16.

  • EPA (2000a). Regulatory impact analysis for the proposed long term and enhanced Surface Water Treatment and Filter Backwash Rule. Washington, DC: U.S. Environmental Protection Agency. February 15.

    Google Scholar 

  • EPA (2000b). Regulatory impact analysis for the proposed Ground Water Rule. Washington, DC: U.S. Environmental Protection Agency. April 5.

    Google Scholar 

  • FDA (1996). Regulations restricting the sale and distribution of cigarettes and smokeless tobacco to protect children and adolescents: Final Rule. Federal Register, August 28.

  • FDA (1999a). Preliminary regulatory impact analysis and initial regulatory flexibility analysis of the proposed rule to require refrigeration of shell eggs at retail and safe handling labels. Federal Register, July 6.

  • FDA (1999b). Food labeling: Trans fatty acids in nutrition labeling, nutrient content claims, and health claims: Proposed rule. Federal Register, November 17.

  • Fisher, A., Chestnut, L. G., & Violette, D. M. (1989). The value of reducing risks of death: A note on new evidence. Journal of Policy Analysis and Management, 8, 88–100.

    Google Scholar 

  • Freeman, A. M. (1993). The measurement of environmental and resource values: Theory and methods. Washington, DC: Resources for the Future.

    Google Scholar 

  • Gold, M. R., Siegel, J. E., Russell, L. B., & Weinstein, M. C. (Eds.) (1996). Cost-effectiveness analysis in health and medicine. New York: Oxford University Press.

    Google Scholar 

  • Hahn, R. W. (1996). Regulatory reform: What do the government's numbers tell us? In: R. W. Hahn (Ed.), Risks, costs and lives saved: Getting better results from regulation, pp. 208–254. New York: Oxford University Press and Washington, DC: The AEI Press.

    Google Scholar 

  • Hakes, J. K., & Viscusi, W. K. (1997). Mortality risk perceptions: A Bayesian reassessment. Journal of Risk and Uncertainty, 15, 135–150.

    Google Scholar 

  • Haveman, R. H., & Weisbrod, B. (1983). Defining benefits of public programs: Some guidance for policy analysis. In: R. H. Haveman & J. Margolis (Eds.), Public expenditure and policy analysis, Third Ed., pp. 80–104. Boston: Houghton Mifflin.

    Google Scholar 

  • Hersch, J., & Pickton, T. S. (1995). Risk-taking activities and heterogeneity of jobrisk tradeoffs. Journal of Risk and Uncertainty, 11, 205–217.

    Google Scholar 

  • Hirth, R. A., Chernew, M. E., Miller, E., Fendrick, A. M., & Weissert, W. G. (2000). Willingness to pay for a quality-adjusted life year: In search of a standard. Medical Decision Making, 20, 332–342.

    Google Scholar 

  • Hodgson, T., & Meiners, M. (1982). Cost-of-illness methodology: A guide to current practices and procedures. Milbank Fund Quarterly/Health and Society, 60, 429–462.

    Google Scholar 

  • Jenkins, R., Owens, N., & Wiggins, L. (2001). Valuing reduced risks to children: The case of bicycle safety helmets. Contemporary Economic Policy, 19, 397–408.

    Google Scholar 

  • Johannesson, M., & Johansson, P.-O. (1996). To be or not to be, that is the question: An empirical study of the WTP for an increased life expectancy at an advanced age. Journal of Risk and Uncertainty, 13, 163–174.

    Google Scholar 

  • Johannesson, M., Johansson, P.-O., & Lofgren, K.-G. (1997). On the value of changes in life expectancy: Blips versus parametric changes. Journal of Risk and Uncertainty, 15, 221–239.

    Google Scholar 

  • Jones-Lee, M. W., Hammerton, M., & Philips, P. R. (1985). The value of safety: Results of a national survey. Economic Journal, 95, 49–72.

    Google Scholar 

  • Kenkel, D. (1997). On valuing morbidity, cost-effectiveness analysis, and being rude. Editorial. Journal of Health Economics, 16, 749–757.

    Google Scholar 

  • Knetsch, J. L. (2001). Environmental valuations and standard theory: Behavioural findings, context dependence and implications. In: T. Tietenberg & H. Folmer (Eds.), International yearbook of environmental and resource economics 2000/2001, pp. 267–300. Northampton, MA: Edward Elgar.

    Google Scholar 

  • Krupnick, A., Alberini, A., Cropper, M., Simon, N., Goeree, R., & Heintzelman, M. (2002). Age, health and willingness to pay for mortality risk reductions: A contingent valuation survey of Ontario residents. Journal of Risk and Uncertainty, 24, 161–186.

    Google Scholar 

  • Kuchler, F., & Golan, E. (1999). Assigning values to life: Comparing methods for valuing health risks. Washington, DC: U.S. Department of Agriculture. Economic Research Service Report Number 784.

    Google Scholar 

  • Landefeld, J. S., & Seskin, E. P. (1982). The economic value of life: Linking theory to practice. American Journal of Public Health, 6, 555–566.

    Google Scholar 

  • Lew, J. L. (2000). Guidelines to standardize measures of costs and benefits and the format of accounting statements. Memorandum for the Heads of Departments and Agencies. Washington, DC: U.S. Office of Management and Budget.

    Google Scholar 

  • Lichtenstein, S., Slovic, P., Fischoff, B., Layman, M., Combs, B. (1978). Judged frequency of lethal events. Journal of Experimental Psychology: Human Learning and Memory, 4, 551–578.

    Google Scholar 

  • McClelland, G. H., Schulze, W. D., & Hurd, B. (1990). The effect of risk beliefs on property values: A case study of a hazardous waste site. Risk Analysis, 10, 485–497.

    Google Scholar 

  • Moore, M. J., & Viscusi, W. K. (1988). The quantity-adjusted value of life. Economic Inquiry, 26, 369–388.

    Google Scholar 

  • Mount, T., Weng, W., Schulze, W., & Chestnut, L. (2000). Automobile safety and the value of statistical life in the family: Valuing reduced risk for children, adults and the elderly. Ithaca, NY: Cornell University. Working paper.

    Google Scholar 

  • Pauly, M. V. (1995). Valuing health benefits in money terms. In: F. A. Sloan (Ed.), Valuing health care: Costs, benefits, and effectiveness of pharmaceuticals and other medical technologies, pp. 99–124. Cambridge: Cambridge University Press.

    Google Scholar 

  • Portney, P. R. (1994). The contingent valuation debate: Why economists should care. Journal of Economic Perspectives, 8, 3–17.

    Google Scholar 

  • Roberts, T., & Frenkel, J. K. (1990). Estimating income losses and other preventable costs caused by congenital toxoplasmosis in people in the United States. Journal of the American Vetinary Medical Association, 196, 249–256.

    Google Scholar 

  • Roberts, T., Buzby, J., & Ollinger M. (1996). Using benefit and cost information to evaluate a food safety regulation: HACCP for meat and poultry. American Journal of Agricultural Economics, 78, 1297–1301.

    Google Scholar 

  • Roberts, T., & Pinner, R. (1990). Economic impact of disease caused by Listeria monocytogenes. In: A. J. Miller, J. L. Smith, & G.A. Somkuti (Eds.), Food borne listeriosis, pp. 137–149. Amsterdam: Elsevier.

    Google Scholar 

  • Robinson, J. C. (1986). Philosophical origins of the economic valuation of life. Milbank Quarterly, 64, 133–155.

    Google Scholar 

  • Shepard, D. S., & Zeckhauser, R. J. (1982). Life-cycle consumption and willingness to pay for increased survival. In: M.W. Jones-Lee (Ed.), The value of life and safety, pp. 95–141. New York: North-Holland.

    Google Scholar 

  • Slovic, P., Fischhoff, B., & Lichtenstein, S. (1985). Regulation of risk: A psychological perspective. In: R. Noll (Ed.), Regulatory policy and the social sciences, pp. 241–278. Berkeley, CA: University of California Press.

    Google Scholar 

  • Sugden, R., & Williams, A. (1986). The principles of practical cost-benefit analysis. Oxford: Oxford University Press.

    Google Scholar 

  • Tengs, T. O., & Graham, J. D. (1996). The opportunity costs of haphazard social investments in life-saving. In: R. W. Hahn (Ed.), Risks, costs, and lives saved: Getting better results from regulation, pp. 167–182. New York: Oxford University Press and Washington, DC: The AEI Press.

    Google Scholar 

  • Tolley, G. S., Kenkel, D. S., & Fabian, R. (1994). Valuing health for policy: An economic approach. Chicago: University of Chicago Press.

    Google Scholar 

  • Viscusi, W. K. (1992). Fatal tradeoffs: Public and private responsibilities for risk. New York: Oxford University Press.

    Google Scholar 

  • Viscusi, W. K. (1993). The value of risks to life and health. Journal of Economic Literature, 31, 1912–1946.

    Google Scholar 

  • Viscusi, W. K. (1996a). Economic foundations of the current regulatory reform efforts. Journal of Economic Perspectives, 10, 119–134.

    Google Scholar 

  • Viscusi, W. K. (1996b). The dangers of unbounded commitments to regulate risk. In: R. W. Hahn (Ed.), Risks, costs, and lives saved: Getting better results from regulation, pp. 135–166. New York: Oxford University Press and Washington, DC: The AEI Press.

    Google Scholar 

  • Viscusi, W. K., & Hirsch, J. (2001). Cigarette smokers as job risk takers. Review of Economics and Statistics, 83, 269–280.

    Google Scholar 

  • Zarkin, G. A., Dean, N., Mauskopf, J. S., & Williams, R. (1993). Potential health benefits of nutrition label changes. American Journal of Public Health, 83, 717–724.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Policy Analysis & Management, Cornell University, Ithaca, NY, 14853, USA

    Don Kenkel

Authors
  1. Don Kenkel
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Kenkel, D. Using Estimates of the Value of a Statistical Life in Evaluating Consumer Policy Regulations. Journal of Consumer Policy 26, 1–21 (2003). https://doi.org/10.1023/A:1022646013504

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1022646013504

Keywords

Search

Navigation