The Value of a Statistical Life: A Meta-Analysis with a Mixed Effects Regression Model

Abstract

The value of a statistical life (VSL) is a very controversial topic, but one which is essential to the optimization of governmental decisions. Indeed, our society faces any number of risks (health, transportation, work, etc.) and, as resources are limited, their complete elimination is impossible. The role of governments is to act as effectively as possible in reducing these risks. To do so, one must first determine the value that society is willing to pay in order to save a human life. However, we see a great variability in the values obtained from different studies. The source of this variability needs to be understood, in order to offer public decision-makers better guidance in choosing a value and to set clearer guidelines for future research on the topic. This article presents a meta-analysis based on 40 observations obtained from 37 studies (from nine different countries) which all use a hedonic wage method to calculate the VSL. Our meta-analysis is innovative in that it is the first to use the mixed effects regression model (Raudenbush, 1994) to analyze studies on the value of a statistical life. The outcome of our meta-analysis allows us to conclude that the variability found in the results studied stems in large part from differences in methodologies.

Keywords: Value of a statistical life, meta-analysis, mixed effects regression model, hedonic wage method, risk

JEL Classification: D80, D13, D61, H43, H51, H53, I18, J38, J58