Adjusting the Value of a Statistical Life for Age and Cohort Effects

Joseph E. Aldy () and W Kip Viscusi

The Review of Economics and Statistics, 2008, vol. 90, issue 3, pages 573-581

Abstract: To resolve the theoretical ambiguity in the effect of age on the value of statistical life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U-shaped relationship with age. In the year 2000 cross section, workers' VSL rises from $3.7 million (ages 18-24) to $9.7 million (35-44), and declines to $3.4 million (55-62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the age-VSL relationship. The value of statistical life-year also follows an inverted-U shape with age. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2008
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Working Paper: Adjusting the Value of a Statistical Life for Age and Cohort Effects (2006)
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