Evaluating public policies in areas like the environment and health often requires a cost-benefit analysis that considers economic values of changes in mortality, morbidity, and well-being. This chapter provides an overview of mortality risk valuation methods used in regulatory bodies. The chapter notably discusses and builds on the previous OECD report from 2012, which provided guidelines on mortality risk valuation as well as estimates of the Value of Statistical Life (VSL) for various country groups. The chapter identifies the objectives and contribution of the report, which include updating the estimates and guidelines provided in the 2012 study based on the latest data and meta-analytical methods.
Mortality Risk Valuation in Policy Assessment
A Global Meta-Analysis of Value of Statistical Life Studies
Abstract
Public policies in domains such as the environmental, transport, energy, food safety and health have impacts on human health and safety. When conducting a cost-benefit analysis (CBA) of such policies, it is important to consider the economic value of changes in mortality risk, morbidity risk and well-being resulting from these policy interventions, or the lack thereof. When changes are valued in economic terms, they can be compared with other monetised benefits or costs arising from a policy or its alternatives. Assessing changes in monetary terms also provides a consistent metric that can be applied across different policy alternatives and therefore facilitates a better understanding of policy trade-offs for decision makers. This report focuses on providing a comprehensive update on the economic valuation of mortality risks.
The economic value of health improvements resulting from a policy often outweighs estimates of its environmental or other benefits. For example, in a review of 115 major federal regulations in the United States, 70% of the total benefits were directly attributable to the monetary value of reducing mortality risks, mainly through improvements in air quality (US Office of Management and Budget (OMB), 2014[1]). Mortality effects also dominate estimates of the costs of climate change, such as the social cost of carbon, where mortality effects are estimated to 50-80% of the total social costs of carbon (USEPA, 2023[2]). Another example is policy measures employed to combat the COVID-19 pandemic, which indicate very high economic values associated with improved health outcomes during the pandemic, particularly among the elderly and vulnerable groups (Hammitt, 2020[3]; Viscusi, 2020[4]).
To value changes in mortality risk resulting from different policy interventions, the concept of value of statistical life (VSL) is often used. VSL is an aggregated value of the willingness to pay (WTP) among individuals for a small reduction in the probability of a fatality or premature death1. It is called a statistical life because it is not the life of any particular person but an aggregation of the values that individuals place on small changes in the risk of premature death. Technically, VSL is an individual’s marginal rate of substitution between money (measured as a change in income, wealth or costs) and mortality risk in a specified time period (Hammitt, Liu and Liu, 2022[5]). The term VSL has over the years often been misunderstood, to the point where some instead prefer using the term “value of a prevented fatality” (e.g. United Kingdom and Canada) or “value of reduced mortality risk” (Simon et al., 2019[6]; Ginbo, Adamowicz and Lloyd-Smith, 2023[7]). VSL is also just one of many alternative metrics to capture the value of changes in mortality risk. Other common metrics include the value-of-life-year (VOLY) which seeks to capture the impact of mortality risk on the length of life, and quality-adjusted-life year (QALY) which seeks to take into account both mortality and morbidity effects by accounting for life-years lost due to premature death as well as the quality of life for life-years with less than perfect health. These concepts are discussed further in Chapter 2.
There are two primary methodological approaches for deriving an individual’s WTP for avoiding risk or accepting compensation in exchange for a higher risk. Methods based on surveys for capturing an individual’s WTP for a hypothetical reduction in mortality risk are known as Stated Preference (SP) approaches. Alternatively, the WTP can be calculated from observations from real market behaviour, such as choosing riskier jobs in exchange for a higher wage or purchasing safety equipment such as helmets. These are referred to as Revealed Preference (RP) approaches. An overview of definitions and methodologies for estimating VSL are available in Chapter 2.
In CBA of policies or programmes that impact human health, effects are often quantified in terms of the number of fatalities or premature deaths that could be avoided with the proposed policy or programme, relative to a scenario without the proposed policy. There may also be public interventions with negative health impacts (such as higher speed limits on roads) that need to be balanced against other benefits, such as time savings. To derive a monetary estimate of the total value of the mortality effects resulting from a policy change, the VSL can be multiplied by the estimated number of avoided fatalities the policy is expected to achieve.
Regulatory practises regarding the estimation of VSL and its use in CBA vary widely among countries, and even between agencies within countries. This section provides a brief background and overview of practices for the valuation of mortality effects in OECD countries.
Historically, the United States has relied mainly on RP methods whereas Europe has relied mainly on SP methods for estimating VSL. However, the United States government agencies have progressively applied evidence from both national RP and SP studies when recommending VSL values (Robinson and Hammitt, 2016[8]; US Department of Health and Human Services, 2016[9]; US Department of Transportation, 2021[10]; USEPA, 2011[11]; USEPA, 2024[12])2.
In the Nordic countries, Norway and Denmark conducted primary national SP surveys in 2012 and 2016 respectively to establish VSL estimates for use in CBAs by governmental agencies in the respective countries (Danish Ministry of Finance, 2019[13]; Norwegian Agency for Public and Financial Management, 2023[14]). The Norwegian ministry of Finance has also issued updated VSL estimates for future years based on the expected growth in GDP per capita (implicitly assuming an income elasticity of VSL of 1; cf. Section 5.2 of Chapter 5). Sweden has an official VSL value, but only in their CBA guidelines for transport projects, and it is based on using benefit transfer from previous SP surveys in other countries (Swedish Transport Administration, 2018[15]).
Within the European Union (EU), VSL estimates are used in economic assessments of external cost from transport and in CBAs of new projects and policies, especially for air pollution from transport and industry (see European Commission DG MOVE (2019[16]) and European Environment Agency (2021[17]), respectively). The VSL for the EU area in these regulatory analyses is based on reviews of RP studies and SP surveys in the United States and Europe that were performed within the EU Research project series ExternE - External Costs of Energy (ExternE, 2005[18]).
In the United Kingdom, the 2022 public CBA Guidelines also known as the Green Book (UK HM Treasury, 2022[19]) does not list a VSL estimate (referred to as the “value of a prevented fatality”). Instead only a quality-adjusted life year (QALY) value is included3. However, the Department of Transport still has an official VSL value in their guidance for transport appraisals (UK Department of Transport, 2013[20]).
The Treasury Board of Canada provides guidelines for cost benefit analysis for regulatory proposals in Canada. As of 2024, the guideline required users to apply updated results from a study published in 2009 that was based on literature prior to 2004, corresponding to CAD2020 8 million4, while also recognising the existence of more recent literature from a range of sources (Treasury Board of Canada Secretariat, 2023[21]). Ginbo, Adamowicz and Lloyd-Smith (2023[7]) performed a meta-analysis to update the Canadian VSL, which resulted in a weighted mean VSL estimate of CAD2020 13 million5 (with upper and lower values from two alternative valuation methods of CAD2020 10 million and 16.5 million, respectively). This revised estimate is 60% higher than the value recommended for use in cost-benefit analysis by the Treasury Board of Canada as of 2024. According to the authors, the differences can mainly be attributed to risk preferences that change over time and advancements in empirical methods, the combination of which they argue would justify an update of the recommended values for use in cost benefit analysis. In general, the official VSL estimates in the United States and Canada are higher than those in European countries and used by the European Commission, even when adjusted for income differences.
For Australia, Ananthapavan et al. (2021[22]) perform a systematic literature review of Australian primary studies and international review papers reporting VSL estimates published from 2007 to January 2019 to update their national base VSL. Of the 18 studies in the review, two are primary Australian studies with a weighted mean VSL of AUD2017 7.0 million. The median VSL in international review studies is AUD 7.3 million.6 The authors recommended a general base VSL of AUD 7.0 million for people of all ages and across all risk contexts, which was 63% higher than the value used by the Australian government at that time (AUD 4.3 million).7
The New Zealand Transport Agency launched their CBA manual in 2024 (New Zealand Transport Agency (NZTA), 2024[23]) providing an updated VSL estimate based on a review of valuation studies from other countries, and a derived Value of a Statistical Life Year (VOLY) value used for air pollution impacts. This update increased the base VSL from NZD 5 million in 2022 to NZD 12.5 million in 2023, which made the VSL used to assess transport projects much higher than the official VSL estimates used by New Zealand public agencies in other sectors (New Zealand Institute of Economic Research (NZIER), 2023[24]).8 This example highlights the importance of coordinating updates (and guidance) regarding VSL across agencies in order to support consistent and transparent assessments of public policy.
More than ten years have passed since OECD’s landmark report on VSL (OECD, 2012[25]). This report offered the first global overview of VSL based on a comprehensive meta database of about 900 VSL estimates from around 90 SP studies published between 1970 and 2008. It also offered considerations and recommendations for policy makers. Since the publication of OECD’s report in 2012, the number of VSL studies globally has increased dramatically and now includes many countries for which no studies were available in the 1970-2008 data. It is therefore timely to update the base VSL estimates and ranges reflecting this new information.
There have also been several methodological developments regarding the estimation, transfer and use of VSL estimates which may warrant an update of OECD’s 2012 report. First, there has been an intense debate regarding what values to use to evaluate the health and lockdown policies introduced in the wake of the COVID-19 pandemic, especially the relationship between VSL and age and possible adjustments made on this basis (Colmer, 2020[26]; Hammitt, 2020[3]; Robinson, Sullivan and Shogren, 2021[27]; Viscusi, 2020[4]). It has also been recognised that events like the COVID-19 pandemic may influence the stated WTP elicited by primary valuation studies that coincide with such events (Mourato and Shreedhar, 2021[28]). Second, the academic literature on mortality risk valuation has highlighted new challenges. For instance, the transfer of VSL estimates from high-income countries to low-income countries is considered difficult in practice (Hoffmann, Krupnick and Qin, 2017[29]; Milligan et al., 2014[30]; Robinson, Hammitt and O’Keeffe, 2019[31]; Viscusi and Masterman, 2017[32]). Third, it is important to consider the inclusion of RP studies to better reflect the spectrum of available evidence on VSL. Finally, there is a need for guidance on how to derive VSL estimates applicable to individual countries that do not have recent domestic studies on which to rely.
Since the publication of OECD (2012[25]), no new comprehensive global reviews or meta-analyses of comparable scope and aim have been carried out. Some more limited reviews of the literature include, for example, Bahamonde-Birke et al. (2015[33]) (road safety); Cropper et al. (2024[34]) (selected studies from the United States, with a focus on the US EPA); Cropper, Hammitt and Robinson (2011[35]) and Kniesner and Viscusi (2019[36]) (generic VSL); Robinson, Hammitt and O’Keefee (2019[31]) and Robinson and Hammitt (2015[37]; 2016[8]) (general reviews with a focus on policy implications); Keller et al. (2021[38]) (global review of VSL, until mid-2019) and Ananthapavan et al. (2021[22]) (Australia). These studies demonstrate a heterogenous and diverse VSL literature in terms of the coverage of risk causes and contexts, methodologies and VSL estimates. The literature also does not provide a clear consensus on how VSL estimates should be summarised and applied in CBA. However, the large and growing body of literature and useful applications point to the importance of the VSL concept in policy evaluation and the value of providing updated and more precise VSL estimates for policy evaluation.
While several meta-analyses have been conducted since OECD’s 2012 report (2012[25]), they are generally of limited scope. Most studies cover individual countries, such as US EPA (2016[39]) and Newbold et al. (2024[40]) (United States)9, Ginbo et al. (2023[7]) (Canada) and Wang et al. (2024[41]) (People’s Republic of China, hereafter ‘China’). The aim of these studies is typically to derive VSL recommendations for national policy evaluation. Since OECD (2012[25]), there has been a heightened emphasis in policy and research circles on risks related to the environment and health and the need to tackle new policy contexts such as pandemics and extreme events (e.g. natural disasters related to climate change). These developments make mortality risk valuation even more important for efficient resource allocation globally (Robinson et al., 2019[42]).
The objective of this report is to review and update the empirical evidence on VSL, utilising all available VSL studies globally that have been published in English to provide updated VSL estimates and guidance for value transfer across countries and regions.
The current analysis reflects important improvements to the work performed in 2012. First, the empirical evidence on which the analysis is based has been updated and expanded. The data used for the meta-analysis includes primary valuation studies from 1970 to 2023, covering the majority of the academic and grey literature on VSL that has been published in English during this time. Second, the current analysis represents the first comprehensive, global study of VSL estimates that integrates RP and SP methods using state-of-the art statistical meta-analysis methods to derive central tendencies in mortality risk valuation and assess the drivers of variation in VSL estimates. The inclusion of different VSL elicitation methods also allowed for a novel statistical model specification where the effect of the choice of elicitation method can be evaluated. Finally, the report provides recommended base VSL estimates for use in policy analysis, as well as guidance on how to adjust base VSL estimates to policy contexts of interest.
The meta-analysis is comprised of three main components, shown in Figure 1.1. In a first step, it proceeds with a search of the global scientific literature on VSL using systematic review procedures. VSL estimates, along with key meta data from the identified primary valuation studies, were compiled into a comprehensive database and coded for use in the meta-analysis. In a second step, the analysis reports descriptive statistics derives measures of central tendency (mean) of VSL estimates and uses meta-regression methods to examine the extent to which various factors explain observed variation in VSL estimates. Extensive robustness and sensitivity analysis are conducted as part of the meta-regression analysis. A third step consists in deriving a recommended set of base VSL estimates and ranges for groups of countries, as well as procedures for using and adjusting these values in policy analyses in different contexts.
It should be noted that the preferred method for assessing the economic value of mortality risk reductions is to conduct a primary valuation study, tailored to the specific policy in question within the relevant country (or group countries) where the policy will have an impact. Multiple studies are often needed given that each study will have advantages and limitations. However, in many instances, this may be too time-consuming, cost-prohibitive, or not strictly necessary for conducting a meaningful CBA (Robinson and Hammitt, 2015[37]). The VSL estimates recommended in this report are intended for use in situations where conducting primary valuation studies is not possible or financially feasible for the purposes of the assessment of policy costs and benefits.
The methodological approach used to derive these recommended base VSL estimates consists of a combination of systematic review and meta-analysis methods. Meta-analysis is a body of statistical methods that are used to review and evaluate existing empirical research (Harrer et al., 2021[43]; Schütt, 2021[44]; Stanley and Doucouliagos, 2015[45]; Stanley et al., 2013[46]; Stanley, 2001[47]). A systematic review is a scholarly synthesis of evidence on a topic, typically a structured literature review undertaken according to a fixed plan, system or method. Systematic reviews are often conducted in connection with more formal statistical meta-analysis of results.
The current analysis also uses the newly compiled database and updated VSL estimates to assess the appropriateness of various benefit and value transfer principles. This includes determining how to adjust mean VSL estimates across countries and what additional factors, such as income and demographic differences, may be considered as the basis for further adjustments.
As this report shows, there remains a lack of clear consensus in the academic literature on the preferred approaches surrounding several aspects of developing VSL recommendations based on meta-analytical results. While numerous meta-analyses exist (Ginbo, Adamowicz and Lloyd-Smith, 2023[7]; USEPA, 2016[39]), several research questions on how to apply VSL estimates in policy appraisals remain unsettled, such as how to adjust for income differences between countries and over time (Robinson, Hammitt and O’Keeffe, 2019[31]; Robinson and Hammitt, 2011[48]; SAB, 2017[49])10. To address outstanding uncertainties and ensure that the methodological decisions involved in each of the steps in Figure 1.1 are scientifically well-justified, the current analysis refers to the relevant academic literature where possible and has benefitted from input from a scientific advisory group with strong expertise in VSL-related issues and meta-analytic approaches.
The VSL estimates developed in this report are expected to be widely applicable in CBA, notably all instances where the economic value of incremental changes in mortality risk resulting from a project or policy must be monetised and compared against the costs or benefits of such interventions. It should also be noted that most situations involving impacts to mortality risk also involve impacts on morbidity (pain and suffering) that should be taken into account. While the valuation of morbidity effects is beyond the scope of this report, the OECD has published a number of studies providing valuations of potential reductions in non-fatal health effects such as asthma and chronic kidney disease (Appéré et al., 2023[50]; Dockins et al., 2023[51]).
The remainder of the report is organised into five chapters as follows:
Chapter 2 provides an overview of the concept of VSL for readers who may be unfamiliar with VSL and VSL elicitation methodologies. It briefly explains the theory and methods underlying the valuation of mortality risks and derived VSL, provides examples of primary valuation studies of both RP and SP, and describes benefit or value transfer (BT) methods based on secondary sources of VSL information.
Chapter 3 describes the sources of VSL meta-data and how they were compiled for this report. This includes a systematic review of new SP and RP studies completed between 2009 and 2023, as well as the SP studies used in the previous OECD report, which spanned 1970 to 2008. The chapter also provides information on RP studies dated before 2009. For all of these data sources, descriptive statistics and VSL estimates are provided for subsets of the meta data to gain a better understanding of the characteristics of the meta database before they are statistically evaluated via meta-analysis methods.
Chapter 4 discusses meta-analytic methods and options, as well as the approach selected for deriving mean VSL estimates from the distribution of VSL estimates in the meta data. It also describes how variables were coded to create the meta database and other issues for data analysis, including the treatment of outlier observations. This chapter also presents preliminary and unweighted VSL estimates for different groups of countries as well sensitivity analyses covering key areas of uncertainty. The estimates reported in Chapter 4 are purely statistical results that are not recommended for use in policy analysis without further adjustments.
Chapter 5 examines the relationship between VSL and income, or per GDP per capita, a measure referred to as the income elasticity of VSL, which is used in the benefit transfer of VSL estimates between countries. A meta-regression analysis estimates this elasticity and evaluates other factors that contribute to variations in VSL. Evidence from the literature on these and other factors, such as income, age and natural disasters is also reviewed in order to inform the discussion on potential policy adjustments to the preliminary and unweighted VSL estimates reported in Chapter 4.
Chapter 6 reports recommended base VSL estimates and ranges for country groups and discusses how these values should be applied when transferring VSL estimates over time and between countries. It also discusses whether the base estimates should be adjusted by other factors. In addition to the values reported in this chapter, further data and tools are expected to become available on the OECD website following the publication of this report.
Finally, the technical annexes (Annex A to Annex H) document the meta-data compilation procedures, meta-data and variable descriptions, full literature lists, and sensitivity analyses and robustness checks performed as part of this meta-analysis.
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← 1. It could also be calculated based on individuals’ willingness to accept compensation for a marginally higher risk. Cf. e.g. Boardman et al. (2018[54]) on the relationship between WTP and willingness to accept and its relevance for CBA.
← 2. The US Department of Health and Human Services guidance also includes Quality-adjusted life year (QALY) estimates, and, in its annual updates, value of statistical life year (VSLY) estimates (U.S. Department of Health and Human Services, 2025[56]).
← 3. According to Chilton et al. (2020[53]), Annex 1: “The approach outlined in Franklin (2015), based on data taken from Carthy et al. (1999), generates a Value of Life Year of around £60,000 and provides the basis for current Her Majesty’s (HM) Treasury Green Book advice on appraisal of government projects that generate life expectancy gains.” The UK DEFRA, however, use a Value of a Statistical Life Year (VOLY) valued derived directly in a UK SP study (Chilton et al., 2004[52]) in assessments of their own regulations.
← 4. Corresponding to USD2020 6.7 million (based on OECD PPP exchange rates).
← 5. Corresponding to USD2020 10.8 million (based on OECD PPP exchange rates).
← 6. These values correspond to a weighted mean and median VSL of approximately USD2017 5.4 million and USD2017 5.6 million, respectively.
← 7. This corresponds to a VSL of approximately USD2017 3.3 million.
← 8. These values correspond to an increase in base VSL from approximately USD2022 3 million to USD2022 7.5 million.
← 9. In addition, the study by Banzhaf (2022[55]) conducts a “meta-analysis of meta-analyses” of meta-analysis studies from the United States.
← 10. One such issue is which value of income elasticity of VSL should be used to transfer VSL estimates across countries with different income levels and to transfer VSL estimates in the same countries over time (Robinson and Hammitt, 2011[48]). This can be both because there is uncertainty in the measurement of income in surveys and because there is limited panel data on the development of income in the same population over time and the relation with VSL (SAB, 2017[49]). This issue is discussed further in Chapter 5.