Estimating an Altruism Adjusted Measure of the Value of a Statistical Life

Many public policies impact citizens’ longevity. In regulatory analyses of these policies, benefit-cost analysts are asked to estimate whether the benefits of these policies outweigh their costs. This requires estimation of the value of a life saved (or, alternatively, extended) as a result of the policy. Because the federal government requires numerous regulatory policies to be evaluated each year, it has a large stake in having an accurate measure for what is known as the “Value of a Statistical Life” (VSL), the value used to measure the mortality-related benefits or costs associated with a policy. Conventional methods for estimating the VSL have used both revealed- and stated-preference data to evaluate an individual’s value of his or her own life.  Current VSL estimates do not consider the value that others may place on a person’s life. Thus, these estimates may under- or overestimate the total social value of this individual to all concerned people once altruistic sentiments are included in the valuation.

The ultimate goal of the project is to produce evidence about whether altruistic sentiments are likely to be important in estimating the VSL. This evidence could have influence on regulatory policymakers and public officials. If the VSL multiplier turns out to be substantially greater than one (as suggested by my pilot study results), then these results should cause public officials to question their methods for evaluating policies. Undervaluing a life in benefit-cost analyses could have large consequences in determining whether regulation passes the benefit-cost test, and thus affect what public policies are adopted or rejected. Ideally, the evidence provided by this project would lead to the development of a more valid measure of VSL, taking into account altruism, to be used in benefit-cost analyses.

Finally, this study evaluates the extent to which an individual’s stated altruistic sentiments can be influenced by context – most importantly, by the age and social proximity of the other person and by the nature of what is being sacrificed.  The goal is to measure willingness to sacrifice own health for another person’s health and willingness to sacrifice own wealth for another person’s wealth.  To evaluate these sentiments, two surveys were administered to representative samples of Americans which contained hypothetical scenarios with context randomly assigned; the first survey posed a dictator game question and the second survey was designed to elicit marginal rates of substitution between own and other’s health/wealth.