Journal of Transpor Economics and Policy, ISSN 0022 $258, Volume 34 Part 2, May 2000, pp.169-188, Variations between Countries in Values of Statistical Life Ted R. Miller Address for Correspondence: Pacific Institute for Research and Evaluation, 8201 Corporate Drive, Suite 220, Landover, MD 20785, USA. This esearch was partially supported by NIOSH ‘grant ROI/CCR312179-03, The data sets used are available from the author on request. Abstract Estimated values of statistical life exist from 68 reasonably credible studies spread across 13, countries. The income-clasicity of values across countries ranges from 0.85 to 1.00 in models at, different levels of aggregation. The values are typically about 120 times GDP per capita, Regression-based value estimates for most developed and developing countries are presented. Date of receipt of final manuscript: November 1999 169Journal of Transport Economics and Policy Volume 34, Part 2 Introduction Regulatory and policy analysts often trade health and safety benefits against other benefits. They need values of life-saving and health risk reduction to guide decision-making. For example, road construction operates within a bud- get. Designers trade travel time, congestion, and related environmental benefits against safety when deciding whether to build many lane-miles to a low safety standard or fewer lane-miles to a higher safety standard. The need to value life- saving benefits is especially pressing when analysing environmental and health ‘questions that affect multiple countries. Should development banks fund the clean-up of vehicle emissions that impair local health if that clean-up produces carbon dioxide that increases global warming? If we produce goods in a low income country with weak environmental laws, how much compensation would fairly redress the environmental ilinesses that result? Is it more important for Africa to attack river blindness or to build roads that support economic devel- opment? What compensation should Kuwait seek for the pollution-related deaths and injuries resulting from the Iragi invasion? Answering these ques- tions requires an understanding of how health risk reduction is valued in differ- ent countries. Such values are also critical if we want to adjust for differences in job risk when comparing wages between countries, or factor health and safety into comparisons of purchasing power parity. ‘A value of statistical life (VSL) is the amount that a group of people is will- ing to pay for fatal risk reduction in the expectation of saving one life. Unfor- tunately, estimating VSLs is difficult and costly. A literature search yielded VSLs for only 13 countries. In several of these countries, VSLs have also been applied to value quality-adjusted life years or QALYs, the health economist’s measure of the utility lost to non-fatal health effects. A clear need exists for an affordable way to estimate VSLs for the remainder of the world reasonably credibly. Regional and world VSLs that allow policy analysts in multi-national organisations to value all lives equally also seem desirable, Such groups as the European Union, the Inter-American Development Bank, and the United Na- tions Development Program are unlikely to feel comfortable valuing lives in member countries differentially. Environmental analysts have increasingly used a benefits transfer approach to value intangible benefits without costly direct measurement. This approach analyses existing values for a class of intangible goods statistically. The result- ing statistical model is then applied to estimate benefit values for similar goods that have never been valued directly. It is unclear whether a benefits transfer approach can be used to estimate the VSL in different countries or if the value for each country must be studied explicitly. This paper analyses the transfer- ability of existing VSL estimates to other countries and provides preliminary 170Variations between Countries in Values of Statistical Life Miller benefits transfer functions. To be fully credible, these transfer functions need to be validated in a few countries, especially ones with very low incomes. VSLs may vary between countries due to differences in cultural norms or in income levels. Within individual countries, the sensitivity of VSL to income has been documented in at least three studies, Viscusi and Evans (1990) suggest that United States (US) values vary roughly linearly with income. Persson et cl, (1995) estimate that Swedish values vary less sharply, with an income elasticity between 0.37 and 0.46. Jones-Lee et al. (1987) estimate the income elasticity in the United Kingdom (UK) is between 0.3 and 0.6. The literature derives VSLs from three classes of willingness-to-pay studies: (1) contingent valuation surveys that obtain respondents” values directly; (2) wage-tisk studies, which estimate the extra wages paid to induce workers to take risky jobs; and (3) consumer behaviour studies, for example of the VSL implicit in decisions to buy smoke detectors. These studies estimate the value of fatal risk reduction and from it, the expected value of saving one statistical life. ‘Asa class, contingent valuations of fatal risk reduction have two problems: (1) the difficulty of designing, fielding, and analysing a credible contingent valuation survey; and (2) the uncertainty about how to handle altruism and family concern for personal safety when analysing willingness-to-pay results, The objections to willingness-to-pay studies of VSL raised by Dubourg (1995), for example, are really concerns about contingent valuation methods that do not apply to the behavioural studies. Hammitt and Graham (1999), Beattie et al. (1998), McDaniels (1992), and Miller (1990) also raise grave concerns about the contingent valuation surveys. They find that bids are inadequately sensitive to changes in the amount of risk reduction offered and critically dependent on how questions are presented, question order, payment vehicle (with tax-funded safety eliciting lower bids), and starting points for bid- ding Miller (1990) identified 30 US wage-risk studies, but few have been pub- lished since that time. As valuations of quality of life lost to personal injury, which are based on the wage-risk studies, entered US courtrooms, such studies came under focused attack (Ward, 1992; Ward and Ireland, 1996). Thoughtful questions were raised about the econometrics. Analyses by Gegax et al. (1991), Leigh (1991, 1995), Dorman (1996), and Dorman and Hagstrom (1998) suggested that compensating wage differentials for fatal risk might be paid only in some US labour market segments or might even be statistical artifacts. Especially in wage-risk models, the strong correlation between fatal and non-fatal risks often causes regression modellers to omit a non-fatal risk variable to avoid multi-collinearity. The resulting estimates represent the value of reducing fatal risks and closely correlated non-fatal risks, but are mislabelled mJournal of Transport Economics and Policy Volume 34, Part 2 as values of fatal risk reduction. In reviewing published estimates, Miller (1990) extracted estimates of the value of fatal risk reduction alone. Dillingham et al. (1996) find the bulk of the utility lost to occupational injury results from the non-fatal risks, Fatal risks are much smaller, and harder to document accurately. This situation may explain the insignificant or inconsistent findings of some US wage-risk models The key question is, with accurate risk data, how sensitive are the wage-risk coefficients to model form and wage data set? Perhaps the best insight comes from Canada, where risk data are much more accurate than in the US. Meng (1989), Meng and Smith (1990), Martinello and Meng (1992), and Vodden et al, (1993) found wage-risk premiums in Canada and in Ontario that persisted through a wide range of model specifications. Miller (1990) attempted rough adjustments of selected US labour market estimates to account for data and model specification problems. All US estimates, however, must be viewed sceptically in the light of the studies by Dorman and Hagstrom (1998), Dorman (1996), and Leigh (1991, 1995). In this paper, sensitivity analyses assess the impact of adjusting or omitting the US wage-risk estimates. Studies of consumer behaviour (those that estimate the value of life implicit in decisions to purchase or use safety devices, or in choices between safety and travel time) often assume informed rational consumers. When they do, they yield assailable results, Survey-driven behavioural studies that ascer- tain the amount of risk reduction consumers thought they obtained, however, can assess risk reduction choices without raising the risk perception and bidding problems of contingent valuation surveys. Gegax et al. (1989) and Miller and Guria (1991), for example, informed respondents of average risks, which provided an anchor they could use to rate their own risk. These studies directly assessed perceived risk and behaviour-induced risk changes. To make pub- lished values from consumer behaviour studies more comparable, Miller (1990) recomputed many of them with a uniform, empirically supported discount rate, value of travel time, and method to separate the values of fatal and non-fatal risk reduction. The Regression Models and Income Data This paper summarises the sound statistical life values by country. It uses a log- log regression on the values to estimate their income elasticity. ‘The regression ‘equation is In(VSL) = a+b In(¥) + ¢Z, w mVariations between Countries in Values of Statistical Life Miller where VSL is the value of statistical life, Y is an income measure, Z is a vector of explanatory variables (described below), and (a, b,c) is vector of regression coefficients. Supplemental semi-logarithmic equations, with ¥ rather than In(¥) on the right-hand-side, broaden the range of benefits transfer models assessed. ‘Some regressions use one observation per country, composed of the mean VSL across studies of the country’s values. In others, the observations are estimates from 68 individual VSL studies or from the 38 individual studies excluding US wage-risk studies. With the regression models, I estimate tentative VSL ranges for countries without VSL studies. Except in the country-level regressions that average VSLs from different years, the income measures used are real per capita gross national product (GNP) and gross domestic product (GDP) for the same years as the VSLs. The sensitivity analysis includes models with purchasing-power-parity adjusted VSL and GDP per capita.' ‘The income data are primarily from the Penn World Table, State Department, World Bank, and other World Wide Web sites. Individual-Study Regressions This paper starts with the 47 VSL estimates that Miller (1990) rated as sound. An intensive literature search for non-US VSLs yielded 21 additional non-US estimates, plus published updates of two of the VSLs included in Miller (1990). The VSL estimates presented here improve on some previously published value choices and conversions to US dollars (notably Miller, 1998). One important improvement is that Jones-Lee’s (1984) estimate of the VSL from the British survey by Maclean (1979) has been replaced by the average of five estimates from the original study. The methods in Miller (1990) are used to make the added estimates comparable with those in the earlier study. Specifically, the estimates are converted to US dollars using the foreign exchange rate in the year that the study used to present its results. All VSLs are then inflated to 1995 dollars using the wage and salary component of the US employment cost index. For consistency with VSLs from other methods, VSLs from wage-risk regressions modelling the influence of risk on pre-tax wages are adjusted from before-tax to after-tax dollars. The marginal tax rates required were obtained or estimated from various world wide web sites. The Appendix describes the studies added and the extraction of best values from them. ¥ In converting from foreign currency 10 US dollars, one approach is to use the exchange rat. This approach has been criticised because a dollar buys more in some places than others. Purchas- ing.power-party price adjusters instead convert on the basis of the price of a market basket of goods and services in another country relative to the US, 13Journal of Transport Economics and Policy Volume 34, Part 2 People’s behaviour is influenced by their perceived risk levels, not actual risk levels. Many labour-market and driving-behaviour estimates of VSL, however, used actual risk levels to extract VSLs. Miller (1990) scaled these estimates with the ratio of perceived to actual risk levels, obtaining the VSLs implied by perceived risk. Because Benjamin and Dougan (1997) raise doubts about the relatively limited study that Miller (1990) relied on to estimate the risk misperception ratios, the individual-study regressions in this paper use unadjusted VSLs. Inclusion of indicator variables tagging VSLs based on actual labour-market risks and on actual motor-vehicle risks allows the regres- sion to adjust for risk misperception. However, adjustment from Miller (1990) for perception of fire risk has been applied to the only available study of fire~ risk reduction, since the regression could not estimate an adjustment with just one observation. (This adjustment is omitted in sensitivity analysis.) ‘Valuation methods may affect the VSL differentials between countries. Of the 39 US VSLs in Miller (1990), 34 came from analyses of safety markets or behaviour, two from other markets, and only three from contingent valuations. ‘The VSLs for Australia, Canada, Japan, and Taiwan, one each from Austria and New Zealand, and four from the UK also came from market behaviour. Con- versely, three VSLs ftom the UK, one from Austria, two from New Zealand, and the VSLs from Denmark, France, Sweden, and Switzerland, came from contingent valuations. An indicator variable allows assessment of how VSLs measured by contingent valuation differ from VSLs derived from actual behaviour. Miller (1990) also identified and tried to adjust for other known problems with subsets of the wage-risk studies. The individual-study regression models in this paper instead include indicator variables identifying these problems, letting the regression coefficients do the adjustment. Specifically, these varia- bles identify two problems with selected labour market studies: (1) use of all- ‘cause fatality risk rather than workplace fatality risk by occupation, which is hypothesised to artificially lower VSLs; or (2) use of fatality risk data by industry without including occupational indicator variables, occasionally exacerbated by use of average wage data by industry rather than individual wage observations, which is hypothesised to artificially raise VSL. From a theory viewpoint, these practices are inappropriate. The regression models specifically estimate the impact of these problems on the VSL estimates and permit removal of their influence from the benefits transfer functions. Thirty of the 68 estimates in the individual-level regressions are US wage- risk estimates. ‘These estimates could be unduly influencing the regressions. Moreover, Leigh (1991) and Staller et al. (1997) question Miller's (1990) choice to classify VSL regression estimates for the non-union sector that were not statistically significant as unreliable. They suggest that these esti- 174Variations between Countries in Values of Statistical Life Miller ‘mates might be legitimate values, or might even imply that non-union workers placed no value on risk reduction. Leigh (1991, 1995), Dorman (1996), and Dorman and Hagstrom (1998) also suggest that wage-risk com- pensation may not be occurring in the US non-union sector currently. Because Idid not review and code recent US estimates, and acknowledging the con- cems raised about my earlier valuation choices, one sensitivity analysis regres- sion simply omits all of the US labour market estimates. In addition, more parsimonious models are estimated for the purpose of transferring VSLs to other countries, as discussed below. These models include only the indicator variables that were statistically significant. Although most models are in log-log form, thus estimating income elasticities directly, other model forms are also estimated for the transfer exercise in order to gain better insight into the range of possible VSL values. Country-Level Regressions ‘The country-level regressions examine model sensitivity to several choices about the VSLs. The income variable is 1995 GNP per capita.? The dependent variable averages the VSLs in the individual studies for each country. Sens- itivity analysis variants substitute: (a) a $5m mid-range VSL estimate for the US from the literature review by Viscusi (1993), converted to after-tax dollars; (b) VSLs adjusted from actual to perceived risk following Miller (1990); and (© fully adjusted mean VSLs that Miller (1990) somewhat arbitrarily adjusted for both risk perception and the problems with risk data described above. Sensitivity analysis on the country-level models (not tabulated) added a variable showing the fraction of a country’s estimates that came from contin- gent valuation (CV) surveys. This variable was insignificant (t < 1.0) and had minimal effect on the income elasticities. Results Table 1 summarises the individual non-US VSLs and the VSLs converted to after-tax dollars. Table 2 shows the number of VSL studies and mean VSL by country. Treating each country’s values as a single observation, the mean VSL 2 ‘Since South Korea and Taiwan experienced explosive GNP growth after the data underlying their VSL studies were collected, their income is 1985 GNP per capita expressed in 1995 dollars. 175Jounal of Transport Economics and Policy ‘Table 1 Range of Statistical Life Values by Study and Country, Best or Mean Value, and Best After-Tax Value Restricted 1 Values Outside the United States (in thousands of 1995 US dollars) country Method Study AUSTRALIA. Kneisner & Leeth (1991) Wage-tisk AUSTRIA ‘Weiss et al. (1986) Wase-tisk Maier eral. (1989) Contingent value CANADA Cousineau (1992) Wage-rsk ‘Martinello & Meng (1992) Wage-risk Meng (1989) Wage-rsk ‘Meng & Smith (1990) Wage-risk Vodden etal. (1993) Wage-risk DENMARK Kigholm (1995) Contingent value FRANCE Desaigues & Rabl (1995) Contingent value JAPAN Kneisner & Leeth (1991) Wage-risk NEW ZEALAND Miller & Gutia (1991) Contingent value Miller & Guria (1991) Behaviour Guria etal. (1999) Contingent value SOUTH KOREA Kim (1985) Wage-tisk Kim & Fishback (1999) Wage-tisk ‘SWEDEN Johannesson eta. (1997) Contingent value Persson & Cedervall (1991) Contingent value Persson etal. (1995) Contingent value Sadergvist (1994) Contingent value SWITZERLAND Schyvab-Christe (1995) Contingent value TAIWAN Hsuch & Wang (1987) Wage-risk Liu & Smith (1996) Wage-tisk UNITED KINGDOM. Ghosh eral. (1975) Behaviour Jones-Lee etal (1983) Contingent value Jones-Lee et al (1995) ‘Contingent value ‘Maclean (1979) Contingent value ‘Marin & Psacharopoulos (1982) Wage-risk ‘Melinek (1974) Wage-risk ‘Melinek (1974) Behaviour 176 Value Range 2671-2796 4494 3207-4031, 4014-4146 6063 3482-4145 1083-8095 1803-4624 2461-18945 689-21562 010829 1082-1663 1403 1800-2400 72-1745, 618 3474-6008 1300-2200 4300-4910, 288-2670 7525-16205 1is7-1874 619-1332 1927-3114 3728-4251, 1437 1608 Value Chosen 2781 4494 MSI 4014 6063 3563, 3669 Bags 3764 aaas 10829 1371 1403 2100 an 678 3164 2030 4605, 1107 7525 Isis 876 1708 3568 2691 2446 3728 1457 1608 Volume 34, Part 2 Afier-Tax Value 2126 3056 3431 2930 4326 2601 4138 3495 3764 3435 8280 1371 1403 2100 698 542 3764 2030 4605 no7 1925 ne 1708 3568 2691 2486 2497 14s7 1608Variations between Countries in Values of Statistical Life Miller Table 2 Number of Studies Averaged and Estimated Mean Value of a Statistical Life by Country {in thousands of 1995 US dollars) Counary ‘Number of Values ‘Mean Value Australia. Austria Canada Denmark France Japan New Zealand South Korea Sweden Switzerland Taiwan United Kingdom United States 3 2,126 3.253 3518 "Note: US mean is from Miler (1990, is $3.45m (in 1995 US dollars). The coefficient of variation is 65 per cent. Vis- cusi’s (1993) estimate for the US is roughly $3.75m in after-tax dollars. Miller (1990) arrives at a lower $2.75m mean VSL across 39 studies with all adjust- ‘ments or $3.5m without risk or data source and model adjustments. ‘The aver- age of seven UK studies is $2.3m. The Canadian average from five studies is 3.5m, Four Swedish studies average $3.1m, while three New Zealand studies average $1.6m. The values for other countries may be less reliable since they are based on only one or two studies each. ‘The regressions on individual studies, shown in Table 3, are able to explain 66-69 per cent of the variance in logged values across 68 studies. The estimated income elasticity for the model with GDP per capita (the primary model) is 0.96, Models based on GDP adjusted for purchasing power parity or on GNP yield slightly lower elasticities of 0.89 to 0.94. The regressions were relatively insensitive to the omission of the VSL for Japan, the risk adjustment of the fire risk estimate, or changes in the VSL for France (not tabulated). ‘The estimates are slightly suspect since, unavoidably, the average income level for the country in the year of the study was used rather than income estimates specific to the individuals studied. ‘The regression on the 38 individual studies other than US wage-risk studies s similar to the regression including those studies. It yields an 7Journal of Transport Economics and Policy Volume 34, Part 2 Table 3 Summary of Regressions on Individual Studies (tstatsies in parentheses) ‘Regression Number toa ee a L(GDPiCapia) 095 0.96 LaGNPICapita) 09s oss La(GDP/Capita, PP adjusted) 089 GNPICepita 12se4 (657) 668) (648) 136) 465) 4.29) (GNPICapita)? =1.63E-9 9) Wage Risk Study” 026 028 027029073028 (150) 20 1.96 223) 91) 18) ‘No Occupational Dummies" 0.75 075 0.69 0.76 0.76 632) 636 G79) 667) os) Risk Beyond Workplace! 1220-1220 -1.22 -1.23 1.20 CAN) C414) 403) 438) (19) CV Sunvey* 042 043032 «087 063047 22 285) 20) G2 46H G.I) Motor Vehicle Behaviou ——-0004 co.) Constant “182-186 “LIB LT 128.76 (1.26) (1.32) (0.74) 1.36) (1.00) (18.12) Rr 0.66 0.66 0.58 0.69 O71 0.68, F-satsic 1982 2416 1438 2742-7128 21.88, Number of Observations 68 GR Degrees of Freedom 4 2 @ @ M ot When applying the regressions, income must be converted 10 1995 US dollars Notes: 2° US wage-ik staies were exluded in Regression 5. Wage Risk Study ifthe VSL came froma wage-rsk study that used etal rather than perceived work place sk levels No Occupational Dummies = 1 ifa wage-sk study did not differentia risk by occupation or include oc cupatonal dummy variables; rif the regression analysed average wages fran industry or occupation rather than the wages of individual worker. 4” Risk Beyond Workplace = I ia wage-rsk study used all-cause mortality risk data by occupation rather than sk of work-telated morality CV Survey = 1a VSL. came from a contingent valustion survey. Motor Vehicle Behaviour = 1 if the VSL came from a stud of moto vehicle behaviour that used actual rather than perceived crash isk levels 178Variations between Countries in Values of Statistical Life Miller Table 4 Summary of Country-Level Regressions (statistics n parentheses) “Regression Number 7 8 9 10 n Lo(GNPICapita) 1.00 093 092 1.00 GNPICepita S.86E-S (11.25) (62) 756) 1138) 1.16) Constant “19 -118-1.06 2.03 633 (226) 105) 089) 232) 4739) Ro 092 0.86 oss 092 092 F-statistic 12652 6193 S723 29.82 124.59 Number of Observations B B B 3 B Degrees of Freedom n n 1 "1 1 US from Miller (1990) a cl oo ce US from Viseusi (1993) “ Risk Perception Adjusted os see Other Miller Adjustments a When applying the regressions, income must be converted to 1995 US dollars elasticity estimate of 0.85 and has an R? of 0.71. This regression drops the dum- my variables for all-mortality risk data and for omission of occupational dum- my variables, because virtually all studies with those problems were US labour market studies. In the regressions on individual studies, the wage-risk studies and CV sur- veys yield roughly comparable VSLs, both of which are significantly higher than the VSLs from the consumer behaviour studies. That finding is consistent with Blomquist (1981) and Miller (1990), which note that consumer behaviour estimates examine risks that people typically under-perceive. Consistent with Miller (1990), the wage-tisk studies that inappropriately use all-cause mortality by occupation underestimate VSL, while those that fail to use occupational mortality risk or occupational dummies overestimate VSL. ‘Table 4 summarises the country-level regression models. Judged by r? and F values, the country-level model with Miller’s partially adjusted estimate for the US and the model with Viscusi’s estimate fit better than Miller’s fully ad- usted or risk-adjusted estimates. Across countries, the average VSL increases almost linearly with income. Consistent with the individual study regressions, the income elasticity ranges from 0.92 to 1.00. Itis 1.00 in the two best country- level models. 179Journal of Transport Economies and Policy Volume 34, Part 2 Table 5 1997 GDP/Capita, VSL Range, and VSL Range as a Multiple of GDP/Capita for Selected Countries (thousands of 1995 US dollars) GDPICapita Measured Range or VSL Best Range as Muliple Estimate Low High Low High worLD 4.08 30900680137 NORTH AMERICA 16435 1600 2.600 219097158 EUROPEAN UNION 20714 mim ‘Argentina 3720 usm. ‘Avstalia 20316 13153 Austria 24a 1 Belgium 24 1277180 Bran 4320 10s 185, Canada 19225 10916 Chile 4598 14h (Czcch Republic 439 1014 Denmark 30334 24 162 Finland 230 03152 France nins ies Germany 245406 188 Greece 10.980 100164 Hong Kong 24a7 os 157 Hungary 4275 133 208 Ireland 191198 8 156 Israel 16.127 105 161 aly 19.081 no 1s7 Japan 36399 19 Kuwait 16329 1216s Malaysia 432 Rs 19 Mexico 3529 10235 Netherlands 2307 bs 179 New Zealand 15100 162s 2400 2020 105.139 Norway 33300 5200 4300120136 Pera 2490 ‘00 9317 Poland 3302 800 m3 241 Portugal on58 1.600 13 68 Russia 2356 ‘300 11305 Saudi Arabia 6309 1.200 136178 South Aiea 2562 ‘300 E3200. South Korea, 1997 10,063 1,700 119169) South Korea, 1985 2630620 ‘300 143306, Spain 12365 22200 116170 Sweden 24670 3,106, 3300 13158. Switzerland 343077508, 7400 mm 215 Taiwan, 1997 bast 2.000 12 Yer “Taiwan, 1985, 5901956, 1.100 133186 ‘Thailand 2614 300 145310, “Trinidad 4a 00 is 19s ‘Turkey 2854 500, Bs 28 United Kingdom 20831 2281 2.100 3.200 iol 14 United States 28,206, 3300 4500 17 160 Uruguay S857 7001100 m9 Venezicla 3678 40 "300 50s 180Variations between Countries in Values of Statistical Life Miller Table 5 Continued 1997 GDP/Capita, VSL Range, and VSL Range as a Multiple of GDP/Capita for Selected Countries (thousands of 1995 US doltars) GDPICapita Measured Range or VSL Best Rangeas Muliple —— timate ‘low High Tow High ‘PROJECTING BEYOND THE RANGE OF THE DATA Bangladesh 282 30 mo 262 China 708 00700110 9 India 39 30 60 184s Indonesia 1.039 100700160. os Jami 2357 200 80 M0 3I8 ‘Nigeria a9 0 7040 2798 ‘Note: GDP per capita fom OBCD and US Deparment of Sate websites Transfer Function Estimates for Other Countries This section applies the regressions to estimate VSLs for additional countries. Regressions 2 to 7 and 11 are used to compute the VSL range for most devel- ‘oped countries. To obtain arithmetic rather than geometric mean estimates of the unlogged values, the constant in the estimating equation has been increased by half the variance in the logged residuals (Johnson et al., 1994). The individ- ual study regressions are evaluated with: (1) the contingent valuation indicator variable set to 1 and the wage-risk study indicator variable set to 0; or (2) the wage-risk study indicator set to 1 and the contingent valuation indicator set to 0. “Implicitly, setting either of these indicator variables to 1 corrects for risk misperception. The “best estimate” is from Regression 2, which includes all 68 studies, GDP per capita as the income measure, and no insignificant indicator variables. In the best estimate, the wage-risk study indicator is set to 1 and the contingent valuation indicator to 0 because of the concerns about contingent valuation estimates raised in the introduction. Worldwide, the predicted average VSL is between $0.6m and $0.9m per capita. Itis between $1.6m and $2.6m for North America, and between $2.5m and $3.6m for the European Union. Table 5 presents GDP per capita, the study- based VSL estimates from Table 2, the best estimates from the preferred model (Model 2), and the range of regression-based VSL estimates across eight regres- ions for a large number of countries. 181Journal of Transport Economics and Policy Volume 34, Part 2 Most countries in Table 5 have GDP per capita of at least $2,000. Applying the regressions beyond these bounds may stretch too far beyond the data. In the actual data, the VSL for South Korea in 1982 represented the lowest income population, with a GDP per capita of $2,744 (in 1995 US dollars). Never- theless, Table 5 includes extremely tentative VSL ranges for a few lower in- come countries. These values urgently need validation and are offered primarily for that purpose. Encouragingly, the VSLs for South Korea were published after a preliminary version of the present study was completed and lay comfort- ably within the VSL range initially predicted. (These VSLs are now incor- porated in the regressions.) ‘To help interpret the VSLs, Table 5 also displays them as a multiple of GDP per capita. The lower bound on VSL is consistently on the order of 120 times annual GDP per capita. Given that the income elasticity of VSL is roughly 1, this consistency is not surprising. Discussion The elasticity estimates in the country and individual-study models are ex- tremely close, varying from 0.92 to 1.00 in the country-level regressions, and from 0.85 to 0.96 in the individual-study regressions. ‘The modelled estimates are stable across a wide range of models. They are not generally sensitive to decisions about how to handle individual studies. The estimates are also stable when the GDPs and VSLs are converted to US dollars using purchasing power parity price adjusters ‘The range of the country-level and individual-level estimates across regres- sions is often narrower than the range of VSLs among studies about a country. This reasonably compact range is encouraging. Combined with model stability, suggests that a benefits transfer approach may be credible for VSL estimation. All the measured mean VSLs (or in the case of Canada, VSLs from two of five studies but not the mean) lie within or very close to the VSL ranges from the transfer functions. Currently, only one VSL estimate is available for each of the two countries with the highest per capita incomes — Japan and Switzerland. ‘The modelled VSL range for these countries is considerably wider than for other countries, suggesting the need to further study their VSLs directly. In particular, the current Japanese value from Kneisner and Leeth (1991) comes from a regression model on aggregate data by industry where the critical regres- jon coefficient is marginally significant, is sensitive to model form, and may iply be inaccurate; in fact, the regression suggests that such aggregate models overestimate VSLs. 182Variations between Countries in Values of Statistical Life Miller ‘These estimates of income elasticity are considerably higher than some of the within-country elasticity estimates mentioned in the introduction. This ob- servation suggests a further hypothesis: perhaps the income elasticity between countries is larger than that within countries. Essentially, rich countries might have higher expectations about the quality of life and its value, Those expect- ations would shape the VSLs of both the rich and the poor. Except for the wwealth-elite, this hypothesis recognises that above-average income does not free individuals from constraints imposed by commonly shared infrastructure and services. In 1991, World Bank Vice President (and subsequently US Treasury Secre- tary) Lawrence Summers suggested that it might be economically efficient to transfer pollution to less developed countries (LDCs) where the productivity losses of ill health would be smaller. More recently, the International Labor Organization has questioned whether the lack of occupational health and safety protections in LDCs is appropriate. The regressions provide only limited ‘guidance on these issues. VSLs are appropriate for analysing health and safety improvements, but not health and safety reductions such as nuclear waste ex- ports. Contingent value surveys show that people are almost universally willing to pay far less for risk reduction than they demand (are willing to accept) in ex- change for increased risk. The regressions suggest that fatal-risk reduction has a lower value in the least developed economies. Thus, it seems possible to analyse when it is eco- nomically efficient for developed countries to continue existing transfers of pollution or other health and safety problems to LDCs. Before doing so, the benefits transfer functions urgently need to be confirmed through studies of risk-avoidance behaviour in one or two LDCs. Because of their many validity threats, contingent valuation studies in LDCs are less likely to resolve the issue, although experimental studies might if they could be structured without posing unethical risks to the subjects. Knowing how people value their own lives is only one step in making multi- national decisions about environmental and other life-safety interventions. Equity also merits consideration. Although possibly economically efficient, it seems both unfair and politically unwise to vary VSLs between residents of different member nations when setting rules for the European Union. Similarly, considering income elasticities in government decision-making within a country inappropriately treats citizens differentially, favouring the rich over lower income residents. The transfer functions appear to offer a practical and affordable way, pethaps the only one, to estimate regional or world values for multinational analyses. Nevertheless, it is unclear that international work safety standards keyed to the world average VSL would be appropriate. They ‘would force the lowest income countries to invest more in safety than their res- 183Journal of Transport Economics and Policy ‘Volume 34, Part 2 idents desired or felt they could afford. Perhaps the VSL for the lowest-income country is the fairest to use in setting the minimum international standard. When using VSLs from multiple countries in policy analysis, first adjusting to purchasing power parity seems appropriate. Alternatively, analysts might adopt the World Bank tradition of applying equity weights to assure lower in- ‘come populations are treated fairly. That approach, however, has the same merits and problems when valuing life-safety as other goods. ‘The regressions shed light on the science of valuing statistical lives. They show that contingent valuation VSLs and VSLs from wage-risk studies are roughly comparable. Wage-risk studies that fail to use risk data by occupation (or alternatively to control for occupation) tend to overestimate VSLs, as do analyses that explain wage variations between industries rather than between individuals. Studies of consumer behaviour yield low VSLs unless they inter- pret behaviour based on perceived risk levels. In summary, value of statistical life in the 13 countries studied averages at least 120 times per capita income. Benefits transfer with regression models can probably provide reasonable estimates for developed and developing countries, ‘Average values for the richest countries and especially for countries with GDP per capita under $2,000 are priorities for validation. Appendix Many recent European VSLs come from contingent valuation surveys. Gener- ally, they are patterned after the respected personal interview survey about highway safety in the UK by Jones-Lee, Hammerton, and Abbott (1987), Jones-Lee, Loomes, and Philips (1995) concentrated on non-fatal risks, but valued fatal risk reduction as well. Maier et al. (1989), Kidholm (1995), Desaigues and Rabl (1995), and Schwab-Christe (1995) provide contingent valuation VSLs for Austria, Denmark, France, and Switzerland. In extracting a VSL for France from Desaigues and Rabl (1995), I favour the average VSL for trimmed means for risk levels of 500 and 1000 lives saved over the study's regression-based estimate. Since the other contingent valuations are generally trimmed mean VSLs, the trimmed mean seems the most appropriate choice for comparative analysis. In sensitivity analysis, I also average the VSLs for 500, 1000, and 2000 lives saved. While this change affects the estimated income elasticity minimally, France has a large residual. Persson and Cedervall (1991) developed a somewhat suspect Swedish mail-out survey. The median response 184Variations between Countries in Values of Statistical Life Miller to almost every VSL question was 100 kroner, even though the risk levels probed varied fairly widely. Persson et al. (1995) improved on Persson and Cedervall (1991). Johannesson et al. (1997) took a different approach, devel- oping a Swedish contingent valuation survey that values changes in life expect- ancy. Tuse the mean VSL from Johannesson et al.’s first method since they indicate their second method is exploratory. Soderqvist (1994) conducted a contingent valuation survey on radon risks. The survey failed to ask how long respondents expected to be exposed to the risk. Instead, the author examined the VSL implied by different exposure periods, arriving at a very wide value range. I use the paper's recommended best estimate for a five-year exposure period based on actual risk, which lies toward the low end of its best range based on perceived risk Miller and Guria (1991) studied New Zealand VSLs in a highway safety context, They made contingent value estimates using versions of the Jones-Lee questions and questions from Viscusi et al. (1991). They made a further estimate from reported speed choice behaviour in bad weather. Guria et al, (1999) obtained consistent highway safety estimates for New Zealand from standard gamble and risk-risk trade-off survey questions. I exclude a Canadian contingent valuation survey (Lanoie et al. 1995), which offers no information on ‘median estimates and largely fails to trim extremely high bids. (L also exclude the article’s wage-risk regression on 63 individual observations, a sample far in- ferior to the typical wage-risk study with 1,000 or more.) ‘The remaining non-US VSL estimates are from wage-risk models. An Austrian model (Weiss et al. 1986) yielded slightly lower estimates than the Austrian contingent valuation. Kneisner and Leeth (1991) developed aggreg- ated wage-tisk models for Australia and Japan. The Japanese estimate was sensitive to model form; a less aggregated model may be needed to derive a reliable estimate. Sensitivity analysis examines the impact of omitting VSL, which was large. Hsueh and Wang (1987) and Liu and Smith (1996) estimated wage-risk models for Taiwan; Kim (1985) and Kim and Fishback (1999) estimated them for South Korea. My adjustment of these estimates to after-tax dollars is very rough. Siebert and Wei’s (1994) UK wage-risk study has been excluded because it extracted the VSL incorrectly and did not provide the information needed to extract it correctly. (The paper computed the “mean ‘wage” by exponentiating the mean of observations on In(wage); unfortunately, because logarithms are non-linear functions, this procedure does not yield the ‘mean wage.) A series of Canadian wage-risk models used more accurate risk data than similar US studies (Meng, 1989; Meng and Smith, 1990; Martinello and Meng, 1992; Cousineau et al. 1992; and Vodden et al, 1993). Vodden et al. (1993) tested a wide range of functional forms; estimates clustered in two ranges, with 185Journal of Transport Economics and Policy Volume 34, Part 2 Jog-Linear models that included risk and risk-squared as variables yielding esti- mates double the estimates from other models. (In this paper, I average several estimates.) Meng’s other studies often applied only the formulation that yielded the higher estimates, ‘The older VSLs retain adjustments from Miller (1990) that separate fatal from non-fatal risk and introduce a uniform 2.5 per cent discount rate and a travel time value of 60 per cent of the wage rate when these parameters ‘were used to estimate values from behaviour. The newer VSLs make similar adjustments when appropriate. References Beatie, J, J. Covey, P. Dolan, L. Hopkins, M. Jones-Lee, G. Loomes, N, Pidgeon, A. Robinson, and A. Spencer (1998): “On the Contingent Valuation of Safety and the Safety of Contingent Valuation: Part I — Caveat Investigator”. Jounal of Risk and Uncertainty, 17, 5-26. Benjamin, D. K., and W. R. Dougan (1997): “Individuals Estimates ofthe Risks of Death: Part I—A Reassessment of the Previous Evidence”. Journal of Risk and Uncertainty 15, 15-34. Blomauist,G. (1981): "The Value of Human Life: An Empirical Perspective”. Economic Inquiry, 19, 157-64, ‘Cousineau, J, R. 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