Euthanizing the Value of a Statistical Life

Many policies and regulations are intended to protect human life and health. To analyze the benefits and costs of these measures, we must address society’s willingness to pay (WTP) for a variety of health-risk reductions. By convention, economists report estimates of this WTP in terms of a unit called a “statistical life.”1 While some economists may not be particularly familiar with this terminology, they catch on quickly when the “value of a statistical life” (VSL) is explained as a marginal rate of substitution between mortality risk and money (i.e., other goods and services). The VSL is a ratio in which the numerator is the marginal utility of a small reduction in mortality risk, r , and the denominator is the marginal utility of a small change in income, Y .2 While the WTP for an incremental risk change will be small, the numerical value of this ratio is very large. For mortality risks (typically the risk of sudden death in the current period), empirical