The Income Elasticity of the Value per Statistical Life: Transferring Estimates between High and Low Income Populations
ABSTRACT The income elasticity of the value per statistical life (VSL) is an important parameter for policy analysis. Mortality risk reductions often dominate the quantified benefits of environmental and other policies, and estimates of their value are frequently transferred across countries with significantly different income levels. U.S. regulatory agencies typically assume that a 1.0 percent change in real income over time will lead to a 0.4 to 0.6 percent change in the VSL. While elasticities within this range are supported by substantial research, they appear nonsensical if applied to populations with significantly smaller incomes. When transferring values between high and lower income countries, analysts often instead assume an elasticity of 1.0, but the resulting VSL estimates appear large in comparison to income. Elasticities greater than 1.0 are supported by research on the relationship between long-term economic growth and the VSL, by cross-country comparisons, and by new research that estimates the VSL by income quantile. Caution is needed when applying these higher elasticities, however, because the resulting VSLs appear smaller than expected future earnings or consumption in some cases, contrary to theory. In addition to indicating the need for more research, this comparison suggests that, in the interim, VSL estimates should be bounded below by estimates of future income or consumption.
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ABSTRACT: Although advances in the reduction of maternal mortality have been made, up to 273,000 women will die this year from obstetric etiologies. Obstructed labor (OL), most commonly treated with Caesarean delivery, has been identified as a major contributor to global maternal morbidity and mortality. We used economic and epidemiological modeling to estimate the cost per disability-adjusted life-year (DALY) averted and benefit-cost ratio of treating OL with Caesarean delivery for 49 countries identified as providing an insufficient number of Caesarean deliveries to meet demand. Using publicly available data and explicit economic assumptions, we estimated that the cost per DALY (3,0,0) averted for providing Caesarean delivery for OL ranged widely, from $251 per DALY averted in Madagascar to $3,462 in Oman. The median cost per DALY averted was $304. Benefit-cost ratios also varied, from 0.6 in Zimbabwe to 69.9 in Gabon. The median benefit-cost ratio calculated was 6.0. The main limitation of this study is an assumption that lack of surgical capacity is the main factor responsible for DALYs from OL. Using the World Health Organization's cost-effectiveness standards, investing in Caesarean delivery can be considered "highly cost-effective" for 48 of the 49 countries included in this study. Furthermore, in 46 of the 49 included countries, the benefit-cost ratio was greater than 1.0, implying that investment in Caesarean delivery is a viable economic proposition. While Caesarean delivery alone is not sufficient for combating OL, it is necessary, cost-effective by WHO standards, and ultimately economically favorable in the vast majority of countries included in this study.PLoS ONE 01/2012; 7(4):e34595. · 3.73 Impact Factor