On the value of estimating the value of a statistical life
Schweizerische Zeitschrift für Volkswirtschaft und Statistik / Revue Suisse d'Economie politique et de Statistique / Swiss Journal of Economics and Statistics, Volume 137, Issue 1, 2001, Pages 27-34
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".