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Value of statistical life in India: A hedonic wage approach

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  • Agamoni Majumder
  • S Madheswaran

    (Institute for Social and Economic Change)

Abstract

Conducting benefit-cost analysis of health and safety regulations requires placing a dollar value on reductions in health risks, including risk of death. These values, estimated from observed labour market data and converted to Values of a Statistical Life (VSL), are used to value reductions in risk of death achieved by industrial safety programmes or environmental health programmes. In this context, this study examines whether workers are paid compensation for their job risk and hence estimates their Value of Statistical Life (VSL) that will reflect job risk preferences of workers in India. The theory of compensating wage differential forms the basis for estimating mortality risks in this study. Using hedonic wage approach, the VSL estimated in this study is INR 44.69 million ($ 0.64 million) and the estimated Value of Statistical Injury (VSI) is INR 1.67 million ($0.02 million). Workers who perceive their job to be hazardous earn a wage premium of Rs 4,358 ($ 68) annually. This paper also examines the implications of using Benefit Transfer Methodology (BTM)and found that it understates the VSL estimate of India. The policy options are highlighted based on the empirical estimates.

Suggested Citation

  • Agamoni Majumder & S Madheswaran, 2018. "Value of statistical life in India: A hedonic wage approach," Working Papers 407, Institute for Social and Economic Change, Bangalore.
    • Handle: RePEc:sch:wpaper:407
    as

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    References listed on IDEAS

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    5. Simon, Nathalie B. & Cropper, Maureen L. & Alberini, Anna & Arora, Seema, 1999. "Valuing mortality reductions in India : a study of compensating wage differentials," Policy Research Working Paper Series 2078, The World Bank.
    6. Majumder, Agamoni & Madheswaran, S., 2016. "Value of statistical life: A meta analysis with mixed effects regression model," Working Papers 362, Institute for Social and Economic Change, Bangalore.
    7. Richard Thaler & Sherwin Rosen, 1976. "The Value of Saving a Life: Evidence from the Labor Market," NBER Chapters, in: Household Production and Consumption, pages 265-302, National Bureau of Economic Research, Inc.
    8. repec:reg:rpubli:282 is not listed on IDEAS
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    Cited by:

    1. Agamoni Majumder & S. Madheswaran, 2020. "Compensation for Occupational Risk and Valuation of Statistical Life," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(3), pages 967-989, June.
    2. Gopal K. Basak & Chandramauli Chakraborty & Pranab Kumar Das, 2021. "Optimal Lockdown Strategy in a Pandemic: An Exploratory Analysis for Covid-19," Papers 2109.02512, arXiv.org.
    3. B. Kelsey Jack & Seema Jayachandran & Namrata Kala & Rohini Pande, 2022. "Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning," NBER Working Papers 30690, National Bureau of Economic Research, Inc.
    4. Roy, Sandip, 2021. "Risk-informed land-use planning in the Indian context: A social cost-benefit analysis," Land Use Policy, Elsevier, vol. 108(C).
    5. Lauren Zimmermann & Subarna Bhattacharya & Soumik Purkayastha & Ritoban Kundu & Ritwik Bhaduri & Parikshit Ghosh & Bhramar Mukherjee, 2021. "SARS-CoV-2 Infection Fatality Rates in India: Systematic Review, Meta-analysis and Model-based Estimation," Studies in Microeconomics, , vol. 9(2), pages 137-179, December.

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    Statistical life;

    Statistics

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