<p>I have been reading a paper by <a href="http://journals.sagepub.com/doi/abs/10.1177/0022343311418265" rel="nofollow noreferrer">Bove &amp; Elia</a> (2011), where they quote a definition of the value of statistical life from <a href="https://www.ncbi.nlm.nih.gov/pubmed/19100640" rel="nofollow noreferrer">Bellavance, Dionne &amp; Lebeau</a> (2009). I have tried making my peace with the necessity of this concept, but I have been rather confused by the used definition. It says that the value of a statistical life is a function of the willingness to pay to reduce the risk of death and the risk of death itself. However, the risk of death reduces the value of a statistical life. Why would it do that? Is it a weight as in an NPV calculation, where the risk of default reduces the expected cash flow?</p>

<econometrics><risk><value><risk-aversion><vsl>
Value of Statistical Life and Risk
JotHa
# Value of Statistical Life and Risk

(Asked by: username_0 on 2018-04-18)

I have been reading a paper by [Bove & Elia](http://journals.sagepub.com/doi/abs/10.1177/0022343311418265) (2011), where they quote a definition of the value of statistical life from [Bellavance, Dionne & Lebeau](https://www.ncbi.nlm.nih.gov/pubmed/19100640) (2009). I have tried making my peace with the necessity of this concept, but I have been rather confused by the used definition. It says that the value of a statistical life is a function of the willingness to pay to reduce the risk of death and the risk of death itself. However, the risk of death reduces the value of a statistical life. Why would it do that? Is it a weight as in an NPV calculation, where the risk of default reduces the expected cash flow?

**Tags:** econometrics, risk, value, risk-aversion, vsl

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## 0 answers

