P.1 

OAR Box 1808 

Prepped by Charmelle Mathews 

Document Number: 

5) ll-A-15 

Docket Number: 

A-90-07 

Printed 11/20/2008 10:28:18 AM Sheet 5 of 91 
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'OCT ,1 -91 12:09 FROM RTP-AQMD TOOflQPS PAGE.002 

Point Estimates of the Value of a Statistical j^ife 

Leland B- Deck, Ph.D. 

Ambient Standards Branch, OAQPS, OAR 

In this note 1 review "The Value of Reducing Risks of Death: A Note on 

New Evidence* by Fisher, Chestnut and Vlolette (Journal of Policy Analysis and 

Management. 1989) to determine an appropriate point estimate foT a value of 

statistical life from the evidence they present The paper is the published version 

of the working paper recently used by some as the citation for estimates of the 

value of a statistical life. 

The paper reviews 21 studies, and presents 22 estimates1 of the range and a 

"judgmental best estimate" of the value of a statistical life. The authors suggest 

that some of the studies have methodological problems, and should not be viewed 

as credible. Eliminating the studies Judged problematic leaves 13 estimates. The 

"judgmental best estimate" of these 13 studies has a range of $1.6 to $8.5 million 

(1986 $). Fisher et. al. suggest this range be used for policy analysis. 

Descriptive statistics on the various estimates are attached as Table 1. The 

attached diagram depicts the distribution of the "best" estimates for the 13 selected 

estimates, with the high and low estimates also shown. 

Occasionally analysts need to use a point estimate value for some sorts of 

analysis. The appropriate point estimate to use Is a matter of judgement. There 

are several possibilities, including: 

P.2 

FEB 

*Some papers present more than one estimate due to different data, 

assumptions, etc- There are 22 estimates that Include both the range and a "best" 

value. Three additional estimates do not include a "best" value. 
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•OCT 1 '91 12:10 FROM RTP-AQMD TO OAQPS PAGE.003 

2 

1) The mean of the extremes of the 13 studies, $5-05 million 

2) The mean of all 13 studies, $4.37 million 

3) The median of all 13 studies, $3.70 million 

The least defensible of these measures is the mean of the extremes. Such a 

measure is only based on 1 estimates, and ignores all of the other information 

provided by the other studies- The mean or median of the various estimates are 

better measures, as they use all of the available information. 

OMB's recent "Regulatory Impact Analysis Guidance", in the Regulatory 

Program of the United gtates Government (1989), discusses the selection of point 

estimates from a variety of studies. 

"In general, it is not appropriate to use the midpoint of the range of 

extreme values provided by the studies. Such a technique ignores the 

information provided by all studies except those providing the 

extreme values, which may be the least reliable. The preferred 

approach to deriving the most-likely estimate of a particular 

parameter in this situation would be to derive it as a weighted 

average of the estimates of the individual studies, with the weight of 

each estimate being based on the reliability (in the best judgment of 

the agency) of the study that produced It." (p 567) 

I recommend using the range of values presented by Fisher et al. when 

conducting mortality risk reduction benefits analysis we perform. When necessary 

to use a point estimate, I recommend using the mean ($4.4 million) of the credible 

studies. 
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•OCT 1 '9 1 12:1 0 

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FROM RTP-AQ-MD 

TABLE 1, 

D^gapfiffijtaj^ 

AjLPjges (22 estimates) 

mean 

median 

mean of extremes 

range 

low 

2.60 

1.9 

437 

.24 - 9.0 

"best" 

3.05 

2.65 

4.47 

.45-8.5 

high 

4.05 

3.2 

7.73 

M - U.9 

Sglgc^lBpgffi (13 estimates) 

low 

mean 

median 

mean of extremes 

range 

3.70 

3.60 

5.05 

"best" 

437 

3.70 

5.05 

high 

5.77 

3.90 

8.25 

rt- « c , HR 1.6 - 14.9 1,6 - 8,5 I * ' *° 
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FROM RTP-AQMD 

Oct 1,91 14:18 No.006 P.05 

TO OflQPS PfiGE.005 

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