Adjusting the Value of a Statistical Life for Age and Cohort Effects

Abstract

To resolve theoretical ambiguity in the effect of age on the value of statistical life, this study implements a novel age-dependent risk measure to estimate age-specific hedonic wage regressions. Statistical analysis of labor market data reveals an inverted-U shaped statistical life-age relationship over the life cycle and population. A minimum distance estimator controlling for birth-year cohort effects produces a peak value of statistical life at age 46. Adjusting for age and cohort effects substantially alters the life-cycle profile of the value of statistical life years and yields a more modest decrease for workers in early 60s. – AI-generated abstract.