Mismeasuring the value of statistical life

Grune-Yanoff, Till

Journal of Economic Methodology, 2009, vol. 16, issue 2, pages 109-123

Abstract: The value of a statistical life (VSL) is an important tool for cost-benefit analysis of regulatory policies that concern fatality risks. Its proponents claim that it measures people's risk preferences, and that VSL therefore is a tool of vicarious governance. This paper criticizes the revealed preference method for measuring VSL. It specifies three minimal conditions for vicarious governance: sensitivity, fairness and hypothetical compromise, and shows that the VSL measure, in its common application in policy formation and analysis, violates these conditions. It therefore concludes that the revealed preference VSL measure, in its current form, is not a tool of vicarious governance.

Keywords: cost-benefit analysis; risk; value of life; vicarious governance (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:taf:jecmet:v:16:y:2009:i:2:p:109-123

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