Suppose you have data that shows people on average are willing to pay $1000 for

Question

Suppose you have data that shows people on average are willing to pay $1000 for one year in order reduce their risk of dying from air pollution from 13-in-10,000 to 9-in-10,000 for that same year. A. Calculate the Value of Statistical Life (VSL) from this information B. Note: you'll need a calculator or something similar for this one. Suppose that a regulation take effect today, but doesn't provide any risk reduction until 15 years from now. What value shou we use for valuing statistical lives saved at that time using the following information? . The value of statistical life you calculated in (a) . Average income will be 1.2 times what it is today Income elasticity of VSL = 0.5 (Bonus!) From an efficiency perspective, what is the most we should invest today to save an estimated 10 statistical lives if the discount rate is 3%? C.

Explanation / Answer

Answer A. VSL=(WILLINGNESS TO PAY÷MODIFICATIONS IN RISK)

SO, VSL=( 1000÷(3÷10000))

VSL= $3333333.33

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