The Monetary Value of a Human Life - Examining the differences between sectors

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: Economic evaluation has become an important tool in health and transport economics. To evaluate decisions, thresholds and benchmark values are required. These thresholds can include valuating lives in monetary form. To ensure an efficient distribution of resources the value of human life should be approximately the same between the sectors. In transport economics value of statistical life (VSL) is frequently used and in health economics the value of a quality-adjusted life-year (QALY) is frequently used to compare costs and benefits. I calculate and create a confidence interval (CI) for the transformed VSL in ten countries using official data. In order to see if there is coherence between the sectors the transformed VSL is compared to the threshold QALY values used in the health sector. In addition, using EuroVaQ data, I also explore for four of these countries if the threshold values reflect individuals willingness-to-pay (WTP). Last, the relationship between GDP per capita and the QALY thresholds are analyzed. I conclude that there is little coherence between the sectors, only one country report similar value. In addition the WTP presented in EuroVaQ is lower than both the transformed VSL and the QALY thresholds. The GDP per capita has a positive effect on the thresholds. The results imply that the two sectors value human life differently.

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