Thursday, July 17, 2008

VSL central

My Environmental Economics students all study the value of a statistical life (VSL) in semester two. This comedy sketch pretty much gets to the bottom of it in 5 minutes.

As an aside I recently measured the UK VSL at close to $18 million (compares favourably with other UK studies but way ahead of the US values). Why are UK residents worth more that American citizens? Answers please.

Just why the VSL of an American citizen has fallen is an interesting question.

Many other sites have covered this so apologies to those that have already seen it (H/T: ENV-ECON]

Time also get in on the act:

An American Life Worth Less Today [TIME]

(WASHINGTON) — It's not just the American dollar that's losing value. A government agency has decided that an American life isn't worth what it used to be.

The "value of a statistical life" is $6.9 million in today's dollars, the Environmental Protection Agency reckoned in May — a drop of nearly $1 million from just five years ago.

The Associated Press discovered the change after a review of cost-benefit analyses over more than a dozen years.

Though it may seem like a harmless bureaucratic recalculation, the devaluation has real consequences.

When drawing up regulations, government agencies put a value on human life and then weigh the costs versus the lifesaving benefits of a proposed rule. The less a life is worth to the government, the less the need for a regulation, such as tighter restrictions on pollution.

Consider, for example, a hypothetical regulation that costs $18 billion to enforce but will prevent 2,500 deaths. At $7.8 million per person (the old figure), the lifesaving benefits outweigh the costs. But at $6.9 million per person, the rule costs more than the lives it saves, so it may not be adopted.


No comments: