New OECD Research on “Valuing Life” – Center for Health Decision Science

The OECD’s pathbreaking new report, Mortality Risk Valuation in Policy Assessment: A Global Meta-Analysis of Value of Statistical Life Studies, substantially improves the evidence base for policy decisions. The value of changes in mortality risks is a key parameter in analyses of environmental, health, and safety policies, including the impacts of climate change. Although many government agencies and other organizations have developed default recommendations for valuing these risk changes, the recommendations are diverse and based on a limited subset of the available studies.

OECD addresses these challenges, reviewing and assessing value per statistical life (VSL) studies conducted around the world. The report was prepared by Henrik Lindhjem, Yohei Mitani, Ståle Navrud, and Olof Bystrom. The scientific advisory committee included Susan Chilton, Alan Krupnick, Kip Viscusi, and CHDS Deputy Director Lisa Robinson.

Robinson discussed the importance of the report at its launch. She noted that this effort far surpasses previous VSL reviews in terms of comprehensiveness, sophistication, and rigor – as well as in the quality of the documentation. It introduces the underlying concepts and current practices, in addition to carefully explaining the systematic review and meta-analysis process and exploring alternative model specifications and adjustments.

The report provides a firm foundation for government and other organizations to update or develop default VSL recommendations. Such defaults aid in ensuring that the resulting analyses are consistent and comparable. They also promote efficiency, by allowing analysts to focus on other policy impacts rather than pursuing yet another review of the VSL literature. More generally, many organizations and individuals have been conducting independent reviews of this literature. The report allows them to move beyond multiple syntheses of existing studies and instead conduct more primary research.

As recognized by the authors, deciding what criteria to use to evaluate the quality and validity of VSL studies and their application to a specific context requires substantial professional judgement. Some may apply the estimates in the report “off the shelf” without adjustment, others may apply different criteria to select studies or a different approach to combine and transfer estimates. Selecting the estimates that likely best represent the preferences of those affected by a policy is key.

While this report is a giant leap forward, it also highlights significant research gaps and inconsistences, which should be priorities for future work. Chief among these is the need for more research in countries underrepresented in the database, particularly low- and middle-income countries, to better understand the preferences of their populations.

Perhaps most important, however, is understanding what these estimates measure. Misinterpretation of the VSL concept continues to be a large and difficult problem. VSL is derived from the willingness of individuals to exchange their own income for a small change in their own risk of dying in a defined time period. These values can then be compared to the costs of a policy to determine whether it will result in net benefits from the perspective of the affected population. Given that these values are bounded by income, assessing the distribution of net benefits across those who are advantaged and disadvantaged is essential, as is applying additional weight to benefits that accrue to those who are worse off.

Learn more: Read the report, Mortality Risk Valuation in Policy Assessment: A Global Meta-Analysis of Value of Statistical Life Studies
Learn more: View the webinar recording, Evaluating the Economic Benefits of Environmental Policies that Save Lives
Learn more: Review the CHDS resource pack, Valuing Health and Longevity in Benefit-Cost Analysis