Abstract
The economic approach to valuing risks to life focuses on risk–money trade-offs 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 trade-offs, implying a median VSL of $7 million for US 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 trade-off rates across the population as people who are more willing to bear risk will exhibit lower wage–risk trade-offs.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Viscusi, W.K. (2008). Value of Life. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1323-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1323-2
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Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
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Keywords
- Compensating differentials
- Contingent valuation
- Deterrence
- Hedonic models
- Hedonic prices
- Human capital
- India
- Life insurance
- Risk to life
- Schelling, T.
- Smith, A.
- South Korea
- Taiwan
- Value of life
- Value of statistical life
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Chapter history
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Latest
Value of Life- Published:
- 21 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_1323-2
-
Original
Value of Life- Published:
- 21 November 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_1323-1