Do the Benefits of COVID-19 Policies Exceed the Costs? Exploring Uncertainties in the Age-VSL Relationship
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Authors
Robinson, Lisa A.
Sullivan, Ryan
Shogren, Jason F.
Subjects
Value per Statistical Life
VSL
COVID-19
Pandemic
Willingness to Pay
Benefit-Cost Analysis
VSL
COVID-19
Pandemic
Willingness to Pay
Benefit-Cost Analysis
Advisors
Date of Issue
2020-06-14
Date
2020
Publisher
SSRN
Language
en_US
Abstract
Numerous analyses of the benefits and costs of COVID-19 policies have been completed quickly as the crisis unfolds. The results frequently depend largely on the approach used to value mortality risk reductions, typically expressed as the value per statistical life (VSL). Many analyses rely on a population-average VSL estimate of $10 million; some adjust VSL for life expectancy at the age of death. We explore the implications of theory and empirical studies which suggest that the relationship between age and VSL is uncertain. We compare the effects of three approaches: (1) an invariant population-average VSL; (2) a constant value per statistical life-year (VSLY); and (3) a VSL that follows an inverse-U pattern, peaking in middle age. We find that when applied to the U.S. age distribution of COVID-19 deaths, these approaches result in average VSL estimates of $10.63 million, $4.47 million, and $8.31 million. We explore the extent to which applying these estimates alter the conclusions of frequently cited analyses of social distancing, finding that they significantly affect the findings. However, these studies do not address other characteristics of COVID-19 deaths that may increase or decrease the values. Examples include the health status and income level of those affected, the size of the risk change, and the extent to which the risk is dreaded, uncertain, involuntarily incurred, and outside of one’s control. The effects of these characteristics and their correlation with age are uncertain; it is unclear whether they amplify or diminish the effects of age on VSL.
Type
Preprint
Description
DRAFT June 14, 2020
For the final version of this working paper, see: Robinson, L.A., R. Sullivan, J. Shogren, Do the Benefits of COVID-19 Policies Exceed the Costs? Exploring Uncertainties in the Age-VSL Relationship, Risk Analysis, Early View, 2020. https://doi.org/10.1111/risa.1356
For the final version of this working paper, see: Robinson, L.A., R. Sullivan, J. Shogren, Do the Benefits of COVID-19 Policies Exceed the Costs? Exploring Uncertainties in the Age-VSL Relationship, Risk Analysis, Early View, 2020. https://doi.org/10.1111/risa.1356
Series/Report No
Department
Organization
Naval Postgraduate School
Identifiers
NPS Report Number
Sponsors
Funder
Format
13 p.
Citation
Robinson, L.A., R. Sullivan, J. Shogren, Do the Benefits of COVID-19 Policies Exceed the Costs? Exploring Uncertainties in the Age-VSL Relationship, Risk Analysis, SSRN, 2020.
Distribution Statement
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.