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The Value of a Statistical Life: Evidence from Panel Data

Thomas J. Kniesner1; W. Kip Viscusi2; Christopher Woock3; James P. Ziliak4

1 Syracuse University · 2 Vanderbilt University · 3 Abbott (Canada) · 4 University of Kentucky

The Review of Economics and Statistics 2012

We address long-standing concerns in the literature on compensating wage differentials: the econometric properties of the estimated value of statistical life (VSL) and the wide range of such estimates. We confront prominent econometric issues using panel data, a more accurate fatality risk measure, and systematic application of panel data estimators. Controlling for measurement error, endogeneity, latent individual heterogeneity possibly correlated with regressors, state dependence, and sample composition yields VSL estimates of $4 million to $10 million. The comparatively narrow range clarifies the cost-effectiveness of regulatory decisions. Most important econometrically is controlling for latent heterogeneity; less important is how one does it.

DOI
10.1162/rest_a_00229
Volume
94 (1)
Pages
74-87
Language
en
Export
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