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THE COST‐PER‐LIFE‐SAVED CUTOFF FOR SAFETY‐ENHANCING REGULATIONS
Author(s) -
Lutter Randall,
Morrall John F.,
Viscusi W. Kip
Publication year - 1999
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1999.tb01450.x
Subject(s) - economics , income elasticity of demand , value of life , cutoff , elasticity (physics) , safety net , econometrics , actuarial science , microeconomics , environmental health , medicine , physics , materials science , quantum mechanics , composite material
This article develops a model of the conditions under which risk regulations that are too expensive have net adverse health effects. Two principal components of this relationship are the implicit value of life and the income elasticity of risky behaviors. Using new empirical estimates for the income elasticity of many of the most consequential risk‐related behaviors, our results imply that a $15 million decrease in income is associated with the loss of an additional statistical life. Regulations that cost more than $15 million per expected life saved will have counterproductive effects on individual mortality. ( JEL LSI , 112, J17)