Paper Abstract
517. W. Kip Viscusi, The Value of Life, 06/2005; subsequently published in New Palgrave Dictionary of Economics and the Law, 2nd edition, Steven N. Durlauf & Lawrence E. Blume (eds.), 2008.
Abstract: The economic approach to valuing risks to life focuses on risk-money tradeoffs for very small risks of death, or the value of statistical life (VSL). These VSL levels will generally exceed the optimal insurance amounts. A substantial literature has estimated the wage-fatality risk tradeoffs, implying a median VSL of $7 million for U.S. workers. International evidence often indicates a lower VSL, which is consistent with the lower income levels in less developed countries. Preference heterogeneity also generates different tradeoff rates across the population as people who are more willing to bear risk will exhibit lower wage-risk tradeoffs.