Value of life

The value of life is an economic value used to quantify the benefit of avoiding a fatality.[1] It is also referred to as the cost of life, value of preventing a fatality (VPF), implied cost of averting a fatality (ICAF), and value of a statistical life (VSL). In social and political sciences, it is the marginal cost of death prevention in a certain class of circumstances. In many studies the value also includes the quality of life, the expected life time remaining, as well as the earning potential of a given person especially for an after-the-fact payment in a wrongful death claim lawsuit.

As such, it is a statistical term, the value of reducing the average number of deaths by one. It is an important issue in a wide range of disciplines including economics, health care, adoption, political economy, insurance, worker safety, environmental impact assessment, globalization,[2] and process safety.[3][4]

The motivation for placing a monetary value on life is to enable policy and regulatory analysts to allocate the limited supply of resources, infrastructure, labor, and tax revenue. Estimates for the value of a life are used to compare the life-saving and risk-reduction benefits of new policies, regulations, and projects against a variety of other factors,[2] often using a cost-benefit analysis.[3]

Estimates for the statistical value of life are published and used in practice by various government agencies. In Western countries and other liberal democracies, estimates for the value of a statistical life typically range from US$1 million–US$10 million; for example, the United States FEMA estimated the value of a statistical life at US$7.5 million in 2020.[5]

  1. ^ Cite error: The named reference DPMC was invoked but never defined (see the help page).
  2. ^ a b Cite error: The named reference Miller was invoked but never defined (see the help page).
  3. ^ a b Franks, Andrew; Whitehead, Richard; Crossthwaite, Phil; Small, Louise (2002). Application of QRA in Operational Safety Issues. Research Report 025. Sudbury: HSE Books. ISBN 0-7176-2570-2.
  4. ^ Rausand, Marvin (2011). Risk Assessment: Theory, Methods, and Applications. Hoboken, N.J.: John Wiley & Sons. ISBN 978-0-470-63764-7.
  5. ^ Cite error: The named reference fema_vsl was invoked but never defined (see the help page).