Calculating the economic value of non-marginal mortality risk reductions

Benefit–cost analyses in public health typically calculate the benefits of mortality reduction interventions by multiplying the Value of a Statistical Life (VSL) and the expected decrease in fatalities. This procedure approximates the benefits of small mortality changes but is inaccurate for large r...

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Bibliographic Details
Published in:Economics letters 2024-04, Vol.237, p.111673, Article 111673
Main Authors: Cardoso, Diego S., Dahis, Ricardo
Format: Article
Language:English
Subjects:
Benefit–cost analysis
Mortality risk
Value of a statistical life
VSL
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Summary:Benefit–cost analyses in public health typically calculate the benefits of mortality reduction interventions by multiplying the Value of a Statistical Life (VSL) and the expected decrease in fatalities. This procedure approximates the benefits of small mortality changes but is inaccurate for large risk changes because it holds constant the VSL—a marginal rate of substitution. Building on the theoretical framework of the VSL, we derive expressions to calculate the benefits of non-marginal mortality reductions with empirically calibrated compensating variations and illustrate their use. •A constant VSL inaccurately approximates the value of large mortality risk changes.•We derive empirically calibrated compensating variation formulas for non-marginal risk changes.•We illustrate the value of mortality reduction using the constant VSL and the derived formulas.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2024.111673