The Value of Statistical Life: Pursuing the Deadliest Catch

Abstract

Observed trade-offs between monetary returns and fatality risk identify estimates of the value of a statistical life (VSL), which inform public policy and quantify preferences for environmental quality, health and safety. To date, few investigations have estimated the VSL associated with trade-offs between returns from natural resource extraction activities and the fatality risks they involve. Furthermore researchers have been unable to determine whether or not one’s VSL is stable across multiple decision environments using revealed preference methods. Understanding these tradeoffs (and the VSL that they imply) may be used to inform resource management policy and safety regulations, as well as our general understanding of the value of life. By modeling a commercial fishing captain's choice to fish or not, conditional on the observed risk, this research investigates these topics using data from the Alaskan red king crab and snow crab fisheries. Using weather conditions and policy variables as instruments, our estimates of the mean VSL range from $4.00M to $4.76M (depending on the modeling assumption and fishery analyzed) and are robust to the incorporation of heterogeneous preferences. Furthermore, given the unique nature of the data we are able to conduct an intra-vessel comparison of the VSL and conclude that for roughly 92% of the fishermen observed in the data set their VSL estimates are stable across both fisheries.

Keywords: value of statistical life (VSL), intra-agent VSL comparison, Alaskan crab fisheries

JEL Classification: J28, Q22