Adjusting the Value of a Statistical Life for Age and Cohort Effects
Viscusi, W. Kip
Aldy, Joseph E.
To resolve the theoretical ambiguity in the effect of age on the value of statistical life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U shaped relationship with age. In the year 2000 cross-section, workers' VSL rises from $3.7 million (ages 18-24), to $9.7 million (35-44), and declines to $3.4 million (55-62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the VSL-age relationship. The value of statistical life-year also follows an inverted-U shape with age.