The John M. Olin Center

Paper Abstract

468. Joseph E. Aldy and W. Kip Viscusi, Age Variations in Workers' Value of Statistical Life, 03/2004; subsequently published as "Labor Market Estimates of the Senior Discount for the Value of Statistical Life" in Journal of Environmental Economics and Management, Vol. 53, 2007, 377-392.

Abstract: This paper develops a life-cycle model in which workers choose both consumption levels and job fatality risks, implying that the effect of age on the value of life is ambiguous. The empirical analysis of this relationship uses novel, age-dependent fatal and nonfatal risk variables. Workers' value of statistical life exhibits an inverted U-shaped relationship over workers' life cycle based on hedonic wage model estimates, age-specific hedonic wage estimates, and a minimum distance estimator. The value of statistical life for a 60-year old ranges from $2.5 million to $3.0 million - less than half the value for 30 to 40-year olds.

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