Abstract

The value of statistical life is an estimate of the monetary benefits of preventing an anonymous death. It is the maximum amount government agencies pay to prevent one death. Society's willingness to pay (WTP) to eliminate private health risks determines agencies' value-of-statistical-life estimates. Unfortunately, agencies ignore society's WTP to eliminate others' health risks. There are two possible justifications. First, altruism does not exist: Peter is not willing to pay to save Paul's life. While this view seems narrow, what if Peter does not know Paul? Even then, one would expect altruism. The second possible justification is more convincing. Certain economists argue that accounting for altruism lowers social welfare because it entails undesirable costs. Policymakers should therefore ignore altruism, though it may exist. Still, this second argument does not consider an important form of paternalistic altruism: safety-focused altruism, which implies that Peter is willing to pay more for improvements in Paul's safety than for improvements in other aspects of Paul's well-being. If both rationalizations for excluding altruism are incorrect, policymakers must face an unpalatable alternative: current life valuation methods are incomplete. If this is the case, policymakers should increase the value of statistical life to account for altruism.