Institute for Social and Economic Change
Working Paper: 362
Value of Statistical Life: A Meta-Analysis with
Mixed Effects Regression Model
Value of Statistical Life (VSL) is a concept which was born out of political interest but later started serving as a policy instrument. Viscusi (2003) in his grand compilation of over 100 studies has broadly discussed the issues, methods and controversies related to VSL. This paper is an extension to his work in the sense that it intends to compile more literature on VSL from 2003 till 2015. After 2003, many new developments took place in VSL literature which has been reviewed and presented in this paper. This critical review of literature incorporates various econometric issues with estimation of VSL besides addressing various other issues like role of unionization and effects of worker’s compensation benefits on risk premiums, heterogeneity issues of VSL and existence of segmented labour markets. VSL values estimated from different studies are not uniform and the source of this variability needs to be understood in order to guide present and future policy making. This article presents a meta-analysis based on 34 observations from 30 VSL studies which have used hedonic wage method to estimate VSL. Our meta-analysis based on mixed effects regression method suggests that the emerging areas such as the effect of worker’s age, compensation benefits and long–term health-related job risk need to be explored further when VSL is estimated.