Definition(s)
Value of Statistical Life
Amount people are willing to pay to reduce risk so that on average one less person is expected to die from the risk.
Sample Usage: The analyst estimates the monetary value of the mortality risk reduction from the initiative by using the VSL estimate.
Annotation:
- The VSL is not intended to value very large reductions in mortality risk or place a value on the lives of identified individuals. VSL measures the monetized value of small reductions in mortality risk for a large number of people. For example, a countermeasure that reduces the annual risk of death by one in a million for 20 million people will, on average, save 20 lives a year. If the VSL is estimated at $5 million, the value of this mortality risk reduction is $100 million (20 expected lives saved times $5 million per life).
- Most VSL estimates are based on studies of the wage compensation for occupational hazards or studies that elicit people’s willingness to pay for mortality risk reduction directly.
Source: DHS Risk Lexicon, U.S. Department of Homeland Security, 2010 Edition. September 2010 Regulatory Guidance