Whether it’s managing pandemics, reducing death from stroke and heart disease, enacting seat belt laws or regulating workplace safety – government policies are part of the essential fabric for preserving public health and well-being. At the same time, policymakers face challenges in formulating such foundational policies as they weigh the environmental and health benefits against their costs.
The “Value of Statistical Life” (VSL) is a concept that has for decades helped policymakers to assess the costs and benefits of any policy that involves changes in mortality risk, such as air pollution regulations. This concept considers trade-offs that individuals make between risk and income, and their willingness to pay for a small decrease in the probability of mortality. Data like this make it possible to estimate the economic benefits resulting from new or existing policies that reduce exposure to health risks. These benefits can then be considered against the costs of implementing the policies.
In 2012, the OECD produced a seminal report that included the largest VSL meta-analysis study ever conducted. Significant advances have been made since the publication of this report and the evidence base on valuation of mortality effects has grown substantially. Despite this evolution, no globally consistent valuation updates have been developed. As a result, practitioners have grappled with applying earlier estimates in the face of fragmented research, evolving circumstances and a global pandemic.
Mortality Risk Valuation in Policy Assessment: A Global Meta-Analysis of Value of Statistical Life Studies provides the first comprehensive global review of the VSL since the 2012 OECD report. It synthesises over 50 years of evidence to provide easy-to-use estimates for six country groupings, while at the same time providing guidance for their transferability across countries and over time. Results indicate that, even when adjusted for inflation, the new values are higher for most global regions. This reflects evolving preferences among individuals, newer and more geographically diverse data, updated meta-analysis methods and overall economic growth. These VSL estimates can help policymakers better understand the benefits of public investments that affect mortality risk across sectors, both within and between similar countries.
It is my hope that these updated estimates will be widely used to set or revise policies, not just for the environment, but also in the transport, energy, food safety and health sectors. If they are used as a starting point, the OECD is well-positioned to help practitioners leverage the report’s values in practice.
Jo Tyndall
Director, OECD Environment Directorate