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What is the value of a statistical life

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Reference no: EM132471583

Problem: Many government environmental programs are designed to keep people safe or reduce illness. An estimate of the social value of human life is needed in order to allocate resources efficiently.

a) Suppose that a hedonic wage study of Canada indicates a willingness to pay of $50 per person to reduce the risk of a premature death from a toxic substance by 1 in 100,000. If the exposed population is four million people, what is the value of a statistical life?

b)  Suppose a regulation to reduce the average concentration of that toxic substance is expected to reduce mortality risk from 6 in 100,000 to 2 in 100,000. The same four million people are exposed to the substance.

i) How many lives is the regulation expected to save?

ii) What is the most the regulation could cost and still have benefits at least as large as the costs?

c) Using the value of a statistical life in part a, and assuming that per capital income in Canada is $50,000 and that a 1% change in income changes the value of a statistical life by 1%, what would the benefit transfer value of a statistical life be in a foreign country in which per capital income is $2,000?

Reference no: EM132471583

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