The Benefits of Mortality Risk Reduction: Happiness Surveys vs. the Value of a Statistical Life

A principal component of many benefit-cost analyses (BCAs) of health, safety, and environmental regulations is the valuation of the fatality risk effects of the underlying policy. Government agencies currently value these expected effects using estimates of the value of a statistical life (VSL), that is, the tradeoff rate between money and very small risks of death. This measure corresponds to BCA’s theoretically appropriate benefits measure, which is society’s willingness to pay for the risk reduction. Here, I will review the VSL approach, compare it to suggested alternatives that use happiness measures of well-being, and address some of the misunderstandings that may be contributing to some researchers’ advocacy for the use of happiness scores for policy valuation. The VSL serves as a focal point of the well-being analysis by Professors John Bronsteen, Christopher Buccafusco, and Jonathan Masur (Bronsteen et al.). As VSL is the fatality risks-benefits measure conventionally used in BCA, it also generally serves as a principal reference point for guiding publicpolicy valuations, which are the focus of Professor Matthew Adler’s article. A common approach to estimating VSL is the use of wage premiums that workers receive for occupational fatality risks. It is