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Home > Data & Research > Research > Programs > Environment and Ener... > Publications > Background Papers

The value of statistical life : a contingent investigation in China

Author:	Wang, Hua; He, Jie;	Collection Title:	Policy Research working paper ; no. WPS 5421
Country:	China;	Date Stored:	2010/09/16
Document Date:	2010/09/01	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Public Administration, Law, and Justice; Health and other social services; Information and communications; Water, sanitation and flood protection
Rel. Proj ID:	1W-Understanding And Improving Environmental Governance In Develop -- -- P101452;	Region:	East Asia and Pacific
Report Number:	WPS5421	Sub Sectors:	Health; Solid waste management; Media; Water supply; General public administration sector
SubTopics:	Environmental Economics & Policies; Economic Theory & Research; Health Monitoring & Evaluation; Labor Policies; Population Policies	Volume No:	1 of 1

Summary: Economic analyses of development projects and policies often involve assigning an economic value to changes in the risk of loss of human life. A typical term used in the economic analyses is the value of statistical life, which reflects the aggregation of individuals' willingness to pay for fatal risk reduction and therefore the economic value to society to reduce the statistical incidence of premature death in the population by one. Studies on the value of a statistical life have been extensively conducted in the developed world; however, few such studies can be found for developing countries. This paper presents a study that estimates individuals' willingness to pay for cancer risk prevention in three provinces of China. The results imply that the mean value of willingness to pay for a cancer vaccine that is effective for one year is 759 yuan, with a much lower median value of 171 yuan. The estimated income elasticity of willingness to pay is 0.42. Using data on the incidence of cancer illness and death in the population, these willingness to pay figures imply that the marginal value of reducing the anticipated incidence of cancer mortality by one in the population is 73,000 yuan and an average value of 795,000 yuan, which are about six and 60 times average household annual income, respectively. The big difference between the marginal value and the average value of fatal risk reduction corresponds to a very low estimated elasticity of willingness to pay with respect to fatal risk reduction. This finding challenges the validity of previous studies of the value of a statistical life, which are mostly based on average willingness-to-pay values of mortality risk reduction.


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