The Value of a Statistical Life under Ambiguity Aversion

Nicolas Treich

No 2291, CESifo Working Paper Series from CESifo

Abstract: We show that ambiguity aversion increases the value of a statistical life as soon as the marginal utility of wealth is higher if alive than dead. The intuition is that ambiguity aversion has a similar effect as an increase in the perceived baseline mortality risk, and thus operates as the “dead anyway” effect. We suggest, however, that ambiguity aversion should usually have a modest effect on the prevention of ambiguous mortality risks within benefit-cost analysis, and can hardly justify the substantial “ambiguity premium” apparently embodied in environmental policy-making.

Keywords: ambiguity; value-of-a-statistical-life; uncertainty; risk-aversion; willingness-to-pay; benefit-cost analysis; environmental risk; health policy (search for similar items in EconPapers)
JEL-codes: D81 I18 Q51 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The value of a statistical life under ambiguity aversion (2010)
Working Paper: The value of a Statistical Life under Ambiguity Aversion (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2291

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