Determining the relative costs and benefits of federal regulations often requires putting an implicit price tag on lives, but there is little agreement on the right way to do it. Should all regulations use the same value of a statistical life, or should it vary based on a person's characteristics, such as age or income? Professors Cass Sunstein and W. Kip Viscusi have been at the forefront of this debate. In this Joint Center seminar, they will review recent data on what people are willing to pay to reduce different kinds of risks and also examine how this information should be used in public policy decisions.
| 11:45 a.m. | Registration | |
| Noon | Luncheon | |
| 12:30 p.m. | Welcome: | Robert W. Hahn, AEI-Brookings Joint Center |
| Panelists: | Cass Sunstein, University of Chicago Law School | |
| W. Kip Viscusi, Harvard University Law School | ||
| 2:00 | Adjournment | |
September 2004
Is Everyone's Life Worth the Same? Dilemmas for Regulators
On September 15, 2004, the AEI-Brookings Joint Center hosted a conference on the value of a statistical life saved. Two of the leading experts on the topic, Cass R. Sunstein and W. Kip Viscusi, reviewed recent data concerning what people are willing to pay to reduce different kinds of risks and examined how this information should be used in public policy decisions.
W. Kip Viscusi
Harvard Law School
Mr. Viscusi discussed the science of determining willingness to pay for a statistical life based on choices made by workers to accept high-risk jobs at higher wages. His life cycle model, in which workers choose both consumption levels and job fatality risks, implied that the effect of age on the value of life is ambiguous. Using an empirical analysis of this relationship that employs novel, age-dependent fatal and nonfatal risk variables, Mr. Viscusi demonstrated that a worker's value of statistical life (VSL) exhibits an inverted U-shaped relationship over the course of a life cycle based on hedonic wage model estimates, age-specific hedonic wage estimates, and a minimum distance estimator. Mr. Viscusi then demonstrated that the value of statistical life for a sixty-year-old ranges from $2.5 million to $3.0 million--less than half the value for thirty- to forty-year-olds.
Cass R. Sunstein
University of Chicago Law School
Mr. Sunstein argued that the value of a statistical life differs across groups of people. Therefore, using a uniform figure to measure the value of a statistical life, the current standard practice at government agencies, is a mistake. Mr. Sunstein said the very theory that underlies current practice calls for far more individuation of the relevant values. According to that theory, the value of statistical lives should vary across risks. More controversially, the value of a statistical life should vary across individuals--even or especially if the result would be to produce a lower number for some people than for others. One practical implication is that a higher value should be given to programs that reduce cancer risks. Another is that government should use a higher VSL for programs that disproportionately benefit the wealthy--and a lower VSL for programs that disproportionately benefit the poor. This latter suggestion raises obvious ethical and economic questions but highlights the fact that regulations may have distributional effects. Although regulation can be an inefficient way to redistribute income, in some cases society may favor regulations that yield benefits greater than the recipients' willingness to pay if the recipients are not forced to pay the costs of the regulations.
Jordan Connors, a researcher at the AEI-Brookings Joint Center for Regulatory Studies, helped prepare this conference summary.
