Monetizing the Benefits of Risk and Environmental Regulation

Abstract

This article provides a response to the opponents of monetization of risk and environmental benefits, such as the authors of "Priceless: On Knowing the Price of Everything and the Value of Nothing." Putting benefit values in dollar terms ensures that there will be full recognition of these benefits in the policy evaluation process, and also places them on terms comparable to program costs. Much of the article is devoted to advocating the use of the value of statistical life to value health risk reductions from government regulations. The article explores sensitive issues such as the heterogeneity of the value of statistical life with respect to income and age. While the use of a "senior discount" was controversial and involved too great of a discount, there is substantial evidence that there are age variations in the value of statistical life. The article also advocates the continued use of stated preference approaches to valuing environmental benefits, which is in contrast to the critiques of stated preference analyses by those who consider environmental resources to be priceless and by those who believe that all non-use values of environmental benefits are zero.

Keywords: policy evalution