The Economic Value of Risks to Life: Evidence from the Swiss Labour Market

In this paper, we use the hedonic approach to estimate the value of a statistical life based on the 1995 Swiss Labour Force Survey (SLFS) and the 1994 Swiss Wage Structure Survey (SWSS). Roughly, the value of a statistical life in Switzerland ranges from CHF 10 to 15 million (6.5-9.5 million current US$). However, more important than the absolute value, our estimates should be taken as an indicator of the value of a statistical life, which is of an order of magnitude higher than previous studies on the value of life in Switzerland, none of which is based on the hedonic approach. Our study confirms previous literature, since the value of statistical life varies with risk level, union coverage, age, and model assumptions. In particular, by separating between individuals with union coverage and those without, we find a slightly higher (but not significantly so) risk premium for the former, which runs counter the idea that in Switzerland unions bargain for safety measures. Finally, along the lines of Moore and Viscusi (1988), we take into account the discounted life years lost, and find a discount rate not significantly different from zero with SLFS and even negative with the SWSS sample.