Index > Course > 2021-02-25: VSL and Risk Density

2021-02-25: VSL and Risk Density

Value of a Statistical Life (VSL)

How much are you willing to pay to prevent an accidental death?

We make these decisions all the time:

• Do you drive something other than a volvo?
  • If not, it implies the added cost of a volvo is greater than the risk reduction over the lifetime of the car
• Do you drive instead of fly to save money?
  • This implies the cost difference between driving and flying is greater than the reduced risk of flying

Should we use a lower VSL for old people?

Class consensus is leaning towards yes

Prof. notes that VSL increases over time, and it increases faster than inflation. People can do more as time goes on.

A scenario: 1000 people each get a 1 in 1000 chance of dying. This is more acceptable than 1 person getting a 1 in 1 chance of dying.

RISK DENSITY. What!? This is wild!

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Index > Course > 2021-02-25: VSL and Risk Density