Skip to main content Accessibility help
×
Home

Pricing Lives for Corporate and Governmental Risk Decisions 1

  • W. Kip Viscusi (a1)

Abstract

The value of a statistical life (VSL) is the most influential single parameter used in calculating the benefits of governmental regulations. While there are some interagency differences, there is a commonality in the conceptual approach, the central role of mortality risk valuation in benefit assessment, and the general range of valuations used. Corporate risk decisions are based on a less rigorous risk analysis procedure. As typified by the General Motors ignition switch recall problems and the company’s lax corporate safety culture, there is often little systematic corporate balancing of cost and risk. This suppression of safety concerns may be attributable to the adverse experiences automobile companies had after conducting risk analyses that valued fatalities based on damages awards for wrongful death, and in response juries levied blockbuster punitive damages awards. Instead, companies should adopt the VSL in its product risk decisions. Companies should also be provided with a safe harbor reference point for responsible risk decisions. Regulatory agencies should use the VSL in setting regulatory sanctions.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Pricing Lives for Corporate and Governmental Risk Decisions 1
      Available formats
      ×

      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Pricing Lives for Corporate and Governmental Risk Decisions 1
      Available formats
      ×

      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Pricing Lives for Corporate and Governmental Risk Decisions 1
      Available formats
      ×

Copyright

This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.

References

Hide All
Aldy, Joseph E. & Viscusi, W. Kip (2007). Age Differences in the Value of a Statistical Life: Revealed Preference Evidence. Review of Environmental Economics and Policy, 1(2), 241260.
Blomquist, Glenn C. (1979). Value of Life Saving: Implications of Consumption Activity. Journal of Political Economy, 96(4), 675700.
Blomquist, Glenn C. (1988). The Regulation of Motor Vehicle and Traffic Safety. Boston: Kluwer Academic Publishers.
Blomquist, Glenn C. (1991). Motorist Use of Safety Equipment: Expected Benefits or Risk Incompetence? Journal of Risk and Uncertainty, 4(2), 135152.
Blomquist, Glenn C., Miller, Ted R. & Levy, David T. (1996). Values of Risk Reduction Implied by Motorist Use of Protective Equipment: New Evidence from Different Populations. Journal of Transport, Economics and Policy, 30(1), 5566.
Crafton, Steven M., Hoffer, George E. & Reilly, Robert J. (1981). Testing the Impact of Recalls on the Demand for Automobiles. Economic Inquiry, 19(4), 694703.
Crandall, Robert W. & Graham, John D. (1989). The Effect of Fuel Economy Standards on Automobile Safety. Journal of Law and Economics, 32(1), 97118.
Dreyfus, Mark & Viscusi, W. Kip (1995). Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency. Journal of Law and Economics, 38(1), 79105.
Gokhale, Jayendra, Brooks, Raymond M. & Tremblay, Victor J. (2014). The Effect on Stockholder Wealth of Product Recalls and Government Action: The Case of Toyota’s Accelerator Pedal Recall. The Quarterly Review of Economics and Finance, 54(4), 521528.
Hakes, Jahn K. & Viscusi, W. Kip (2007). Automobile Seatbelt Usage and the Value of Statistical Life. Southern Economic Journal, 73(3), 659676.
Hoffer, George E., Pruitt, Stephen W. & Reilly, Robert J. (1988). The Impact of Product Recalls on the Wealth of Sellers: A Reexamination. Journal of Political Economy, 96(3), 663670.
Hoffer, George E., Pruitt, Stephen W. & Reilly, Robert J. (1992). Market Responses to Publicly-Provided Information: The Case of Automotive Safety. Applied Economics, 24(7), 661667.
Ivey, Edward C.(1973). General Motors memorandum: Value Analysis of Auto Fuel Fed Fire Related Fatalities.
Jarrell, Gregg & Peltzman, Sam (1985). The Impact of Product Recalls on the Wealth of Sellers. Journal of Political Economy, 93(3), 512536.
Jones-Lee, Michael W. (1989). The Economics of Safety and Physical Risk. Oxford: Basil Blackwell.
Kniesner, Thomas J., Viscusi, W. Kip & Ziliak, James P. (2014). Willingness to Accept Equals Willingness to Pay for Labor Market Estimates of the Value of a Statistical Life. Journal of Risk and Uncertainty, 48(3), 187205.
Reilly, Robert J. & Hoffer, George E. (1983). Will Retarding the Information Flow on Automobile Recalls Affect Consumer Demand? Economic Inquiry, 21(3), 444447.
Rohlfs, Chris, Sullivan, Ryan & Kniesner, Thomas (2015). New Estimates of the Value of a Statistical Life Using Air Bag Regulations as a Quasi-Experiment. American Economic Journal: Economic Policy, 7(1), 331359.
U.K. H.M. Treasury (2011). The Green Book: Appraisal and Evaluation in Central Government. London: HM Treasury.
U.S. Department of Transportation. Office of the Secretary of Transportation (2014). Guidance on Treatment of the Economic Value of a Statistical Life (VSL) in U.S. Department of Transportation Analyses – 2014 Adjustment. Washington, D.C.: http://www.dot.gov/sites/dot.gov/files/docs/VSL_Guidance_2014.pdf.
U.S. Office of Management and Budget (2003). Circular A-4. The White House: https://www.whitehouse.gov/omb/Circulars_a004_a-4.
U.S. Office of Management and Budget. Office of Information and Regulatory Affairs (2014). 2014 Draft Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities. Washington, D.C.: https://www.whitehouse.gov/sites/default/files/omb/inforeg/2014_cb/draft_2014_cost_benefit_report-updated.pdf.
Valukas, Anton R., Jenner & Block LLP(2014). Report to Board of Directors of General Motors Company Regarding Ignition Switch Recalls.
Viscusi, W. Kip (1992). Fatal Tradeoffs: Public and Private Responsibilities for Risk. New York: Oxford University Press.
Viscusi, W. Kip (2000). Corporate Risk Analysis: A Reckless Act? Stanford Law Review, 52(3), 547597.
Viscusi, W. Kip (2002). Punitive Damages: How Jurors Fail to Promote Efficiency. Harvard Journal on Legislation, 39(1), 139167.
Viscusi, W. Kip (2013). Using Data from the Census of Fatal Occupational Injuries to Estimate the ‘Value of Statistical Life’. Monthly Labor Review, (October), 117.
Viscusi, W. Kip (2014). The Value of Individual and Societal Risks to Life and Health. In Machina, Mark J. & Viscusi, W. Kip (Eds.), Handbook of the Economics of Risk and Uncertainty (pp. 385452). Amsterdam: Elsevier.
Viscusi, W. Kip (2015a). Pricing Lives for Corporate Risk Decisions. Vanderbilt Law Review, 68(4), 11171162.
Viscusi, W. Kip (2015b). The Role of Publication Selection Bias in Estimates of the Value of a Statistical Life. American Journal of Health Economics, 1(1), 2752.
Viscusi, W. Kip & Aldy, Joseph E. (2003). The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World. Journal of Risk and Uncertainty, 27(1), 576.
Viscusi, W. Kip & Gentry, Elissa Philip (2015). The Value of a Statistical Life for Transportation Regulations: A Test of the Benefits Transfer Methodology. Journal of Risk and Uncertainty, 51(1), (forthcoming).
Viscusi, W. Kip, Huber, Joel & Bell, Jason (2014). Assessing Whether There Is a Cancer Premium for the Value of a Statistical Life. Health Economics, 23(4), 384396.

Keywords

Pricing Lives for Corporate and Governmental Risk Decisions 1

  • W. Kip Viscusi (a1)

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed