Working Paper: NBER ID: w19494
Authors: Gianmarco Len; Edward Miguel
Abstract: This paper exploits an unusual transportation setting to estimate the value of a statistical life (VSL). We estimate the trade-offs individuals are willing to make between mortality risk and cost as they travel to and from the international airport in Sierra Leone (which is separated from the capital Freetown by a body of water), and choose from among multiple transport options - namely, ferry, helicopter, hovercraft, and water taxi. The setting and original dataset allow us to address some typical omitted variable concerns, and to compare VSL estimates for travelers from different countries, all facing the same choice situation. The average VSL estimate for African travelers in the sample is US$577,000 compared to US$924,000 for non-African travelers. Individual job earnings can largely account for this difference: Africans in the sample typically earn less than non-Africans. The data implies an income elasticity of the VSL of 1.77. These revealed preference VSL estimates from a developing country fill an important gap in the existing literature, and can be used for public policy purposes, including in current debates within Sierra Leone regarding the desirability of constructing new transportation infrastructure.
Keywords: Value of Statistical Life; Transportation Choices; Revealed Preference; Sierra Leone
JEL Codes: J17; O18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Income levels (D31) | Valuation of mortality risk (J17) |
| Valuation of mortality risk (J17) | Value of Statistical Life (VSL) (J17) |
| Individual job earnings (J31) | Value of Statistical Life (VSL) (J17) |
| VSL estimates (J17) | Public policy discussions (J18) |
| VSL estimates (J17) | Justification for infrastructure investments (H54) |