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The Value of Saving a Life: Evidence from the Labor Market

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Disciplines
  • Law
  • Political Science

Abstract

The Value of Saving a Life: Evidence from the Labor Market This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Household Production and Consumption Volume Author/Editor: Nestor E. Terleckyj Volume Publisher: NBER Volume ISBN: 0-870-14515-0 Volume URL: http://www.nber.org/books/terl76-1 Publication Date: 1976 Chapter Title: The Value of Saving a Life: Evidence from the Labor Market Chapter Author: Richard Thaler, Sherwin Rosen Chapter URL: http://www.nber.org/chapters/c3964 Chapter pages in book: (p. 265 - 302) • The Value of Saving a Life: Evidence from the Labor Market * • I. RICHARD THALER UNIVERSITY OF ROCHESTER AND SHERWIN ROSEN UNIVERSITY OF ROCHESTER INTRODUCTION • . LIVELY controversy has centered in recent years on the methodology • ;. . for evaluating life-saving on government projects and in public policy. It is now well understood that valuation should be carried out in terms of a proper set of compensating variations, on a par with benelit meas- • • ures used in other areas of project evaluation. To put it plainly, the i value of a life is the amount members of society are willing to pay to save one. It is clear that most previously devised measures relate in • a very way, if at all, to the conceptually appropriate meas- • ure.' However, in view of recent and prospective legislation on product • :: . . .. and industrial safety standards, some new estimates are sorely needed. This paper presents a range of rather conservative estimates for one important component of life value: the demand price for a person's • •• own safety. Estimates are obtained by answering the question, "How much will a person pay to reduce the probability of his own death by a 'small' amount?" Another component of life value is the amount other people (family and friends) are willing to pay to save the life * This research was partially funded by a grant from the National Institute

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