Policy Relevant Heterogeneity in the Value of Statistical Life: New Evidence from Panel Data Quantile Regressions

Thomas J. Kniesner (), W Kip Viscusi and James P. Ziliak
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Thomas J. Kniesner: Krisher Professor of Economics and Senior Research Associate, Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020, http://www-cpr.maxwell.syr.edu/faculty/kniesner/index.htm
James P. Ziliak: Carol Martin Gatton Chair in Microeconomics; Director, Center for Poverty Research, University of Kentucky, Lexington, KY

No 118, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is $7 million to $8 million per life saved, but the VSL varies considerably cross the labor force. Our results reconcile the previous discrepancies betweenhedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time.

Keywords: value of statistical life; VSL; quantile regression; panel data; fixed effects; PSID; fatality risk; CFOI (search for similar items in EconPapers)
JEL-codes: C23 I10 J17 J28 K00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-res
Date: 2009-10

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Related works:
Working Paper: Policy Relevant Heterogeneity in the Value of Statistical Life: New Evidence from Panel Data Quantile Regressions (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:max:cprwps:118

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