The Social Value of Mortality Risk Reduction: VSL vs. the Social Welfare Function Approach

Adler, Matthew, Hammitt, James K. and Treich, Nicolas (2012) The Social Value of Mortality Risk Reduction: VSL vs. the Social Welfare Function Approach. LERNA Working Paper, n. 12.08.365

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Official URL: http://tse-fr.eu/pub/25735

Abstract

We examine how different welfarist frameworks evaluate the social value of mortality riskreduction. These frameworks include classical, distributively unweighted cost-benefit analysis—i.e., the “value per statistical life” (VSL) approach—and three benchmark social welfare functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian
SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not
necessarily shared by other welfarist frameworks, and we identify when the use of an ex ante or an ex post approach has different implications for risk policymaking.

Item Type: Monograph (Working Paper)
Date: March 2012
Uncontrolled Keywords: Value of statistical life, social welfare functions, cost-benefit analysis, equity
JEL codes: D61 - Allocative Efficiency; Cost-Benefit Analysis
D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D81 - Criteria for Decision-Making under Risk and Uncertainty
Q51 - Valuation of Environmental Effects
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:21
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:25735
URI: http://publications.ut-capitole.fr/id/eprint/16438

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