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26 J. Consumer Pol'y 1 (2003)

handle is hein.journals/jrncpy26 and id is 1 raw text is: Don Kenkel Using Estimates of the Value of a Statistical Life in Evaluating Consumer Policy Regulations ABSTRACT. This paper is a critical review of current practice for the economic evaluation of the life-saving benefits of U.S. consumer policy regulations. Selected evaluations conducted by the U.S. Environmental Protection Agency, the Economic Research Service of the U.S. Department of Agriculture, and the U.S. Food and Drug Administration are briefly reviewed. The standard approach to placing a dollar value on the life-saving benefits of regulations is based on societal willingness to pay for mortality risk reductions, conveniently summarized as the value of a statistical life (VSL). The paper proposes a common-sense rule for improving current practice: Different agencies reducing similar health risks for similar populations should use consistent estimates of the VSL, but each agency should use VSL estimates that are specific to the health risk and population affected by its regulations. Developing VSL estimates that vary by cause of death and that reflect differences in willingness to pay due to age, income, and risk preferences poses a challenge for both the research community that generates VSL estimates and policymakers. The problem of allocating scarce societal resources to life-saving activities arises when evaluating a wide variety of regulations and government programs. Most economists and policy analysts agree on the general principle that the life-saving benefits of public sector activities should somehow be compared to the costs of the activi- ties. The agreement fades, however, when this general principle is put into practice to evaluate specific regulations. Several different con- ceptual approaches that have been proposed over the years continue to influence the current practice of economic evaluation of the life- saving benefits of regulations. This paper is a critical review of current practice for evaluating U.S. consumer policy regulations.1 The next section briefly reviews selected evaluations conducted by the U.S. Environmental Protection Agency (EPA), the Economic Research Service of the U.S. Department of Agriculture (USDA), and the U.S. Food and Drug Administration (FDA). The review of current practice also allows some basic concepts to be defined and illustrated. The reader is referred to Freeman (1993), Journal of Consumer Policy 26: 1-21, 2003. © 2003 Kluwer Academic Publishers. Printed in the Netherlands.

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