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The value of statistical life : a contingent investigation in China

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  • Wang, Hua
  • He, Jie

Abstract

Economic analyses of development projects and policies often involve assigning an economic value to changes in the risk of loss of human life. A typical term used in the economic analyses is the value of statistical life, which reflects the aggregation of individuals'willingness to pay for fatal risk reduction and therefore the economic value to society to reduce the statistical incidence of premature death in the population by one. Studies on the value of a statistical life have been extensively conducted in the developed world; however, few such studies can be found for developing countries. This paper presents a study that estimates individuals'willingness to pay for cancer risk prevention in three provinces of China. The results imply that the mean value of willingness to pay for a cancer vaccine that is effective for one year is 759 yuan, with a much lower median value of 171 yuan. The estimated income elasticity of willingness to pay is 0.42. Using data on the incidence of cancer illness and death in the population, these willingness to pay figures imply that the marginal value of reducing the anticipated incidence of cancer mortality by one in the population is 73,000 yuan and an average value of 795,000 yuan, which are about six and 60 times average household annual income, respectively. The big difference between the marginal value and the average value of fatal risk reduction corresponds to a very low estimated elasticity of willingness to pay with respect to fatal risk reduction. This finding challenges the validity of previous studies of the value of a statistical life, which are mostly based on average willingness-to-pay values of mortality risk reduction.

Suggested Citation

  • Wang, Hua & He, Jie, 2010. "The value of statistical life : a contingent investigation in China," Policy Research Working Paper Series 5421, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5421
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    References listed on IDEAS

    as
    1. Wang, Hua, 1997. "Treatment of "Don't-Know" Responses in Contingent Valuation Surveys: A Random Valuation Model," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 219-232, February.
    2. Wang, Hua & Whittington, Dale, 2005. "Measuring individuals' valuation distributions using a stochastic payment card approach," Ecological Economics, Elsevier, vol. 55(2), pages 143-154, November.
    3. Hammitt, James K & Graham, John D, 1999. "Willingness to Pay for Health Protection: Inadequate Sensitivity to Probability?," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 33-62, April.
    4. Cropper, Maureen L. & G. Sussman, Frances, 1990. "Valuing future risks to life," Journal of Environmental Economics and Management, Elsevier, vol. 19(2), pages 160-174, September.
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    Cited by:

    1. Martin Ravallion, 2012. "Mashup Indices of Development," The World Bank Research Observer, World Bank, vol. 27(1), pages 1-32, February.
    2. Feng Han & Xingcheng Lu & Cuicui Xiao & Miao Chang & Ke Huang, 2019. "Estimation of Health Effects and Economic Losses from Ambient Air Pollution in Undeveloped Areas: Evidence from Guangxi, China," IJERPH, MDPI, vol. 16(15), pages 1-16, July.
    3. А. Zubets N. & А. Novikov V. & А. Зубец Н. & А. Новиков В., 2018. "Численная Оценка Стоимости Жизни Человека В России И В Мире // Quantitative Assessment Of The Value Of Human Life In Russia And In The World," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(4), pages 52-75.

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    Keywords

    Environmental Economics&Policies; Health Monitoring&Evaluation; Labor Policies; Population Policies; Economic Theory&Research;
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