Question

Suppose that hedonic wage studies indicate a willingness to pay $50 per person for a reduction in the risk of a premature death from an environmental hazard of 1/100,000. If the exposed population is four million people, what is the implied value of a statistical life?

Answer 1

Answer:

• The willingness to pay $50 to reduce the risk of premature death from an environmental hazard of 1/100,000.
• The exposed population is 4 million.
• The implied value of statistical life can be calculated as follows

Explanation:

$vsl \: = \frac{change \: in \: willingless \: to \: pay \: }{change \: in \: risk}$

$\frac{50 \: dollar \: \times 4 \: million}{1\div10000 \times 4 \: million \: }$

$\frac{20 \: million \: }{40}$

= $ 5,000,000

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