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On the value of estimating the value of a statistical life

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  • Per-Olov Johansson

Abstract

In this note I discuss the problems of defining and measuring the value of preventing a fatality. A measure reflecting remaining expected present value utility is derived. It is shown that in general the empirical estimate of this measure is biased. This fact complicates the analysis of the value of applying a measure expected to prevent a fatality. Even if the monetary value of preventing the fatality exceeds the cost of applying the measure, it does not follow that the measure is warranted. This problem is encountered also if one use changes in individuals' health profiles, i. e. quality of life data, to calculate the value of "life".

Suggested Citation

  • Per-Olov Johansson, 2001. "On the value of estimating the value of a statistical life," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 137(I), pages 27-34, March.
    • Handle: RePEc:ses:arsjes:2001-i-4
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    1. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586, September.
    2. Bleichrodt, Han & Quiggin, John, 1999. "Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?," Journal of Health Economics, Elsevier, vol. 18(6), pages 681-708, December.
    3. Johansson, Per-Olov, 2001. "Is there a meaningful definition of the value of a statistical life?," Journal of Health Economics, Elsevier, vol. 20(1), pages 131-139, January.
    4. LaFrance, Jeffrey T. & Barney, L. Dwayne, 1991. "The envelope theorem in dynamic optimization," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 355-385, April.
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