the US (in Viscusi and Aldy, 2003, for example).<sup>40</sup> Nevertheless, the VSL estimates in this paper are a comparable proportions of the median household income in Nepal as the estimates in the US: 150 to 300 times the median household income in Nepal versus 100 to 250 times that in the US.

Estimates for populations outside the US, especially for developing countries, is quite rate and vary widely. For instance Kremer, Leino, Miguel, and Zwane (2011) estimate the VSL of less than $1000 based on the revealed willingness of Kenyan households to travel further for cleaner water. Leòn and Miguel (2017) estimate a VSL of $0.6m to $0.9m from the revealed choices on transportation options while traveling to the international airport in Sierra Leone. Greenstone and Jack (2015) highlight the paucity of VSL estimates in developing countries and call for more research in developing revealed preference measures of the willingness to pay for lower mortality (through improving environment quality).

## **6.3 Robustness to various points on the belief distribution**

If potential migrants have uncertain priors about earnings and mortality rate while abroad, then they may not act as expected utility maximizers who maximize the probability weighted average of utilities in various states of the world. In such cases, the expected value of their beliefs may not be the right measure that influences their migration decision. It could be possible that people behave in an uncertainty-averse manner and use a different utility maximization rule. For instance, Gilboa and Schmeidler (1989) propose a max-min rule where agents maximize utility assuming the worst possible state. In this part, I explore robustness of the VSL estimates to using alternative points in their belief distribution.

Table 8 shows that the estimates in Section (6.2) are robust to a few alternative decision-making rules. In column 1, I assume that individuals are extremely cautious about migrating and assume the worst. That is, they assume that the actual mortality risk is the highest end of their belief distribution and the actual earnings, at the lowest. With this assumption, the estimated VSL is $0.16 million using the logarithmic specification and $0.37 million using the levels specification. These estimates are smaller than those in Table 7 but are unlikely to be statistically different. Similarly, column 3 assumes the opposite of column 2: that the individuals take the most optimistic view in making their migration decision. They assume that earnings are the highest end of the belief distribution and mortality is the lowest end of their belief distribution. With this assumption, the estimated VSL is slightly higher but statistically similar to the corresponding estimates in Table 7. Column 2 performs this exercise assuming that the midpoint of their belief distribution are the relevant parameters and column 5 does the same assuming that their most strongly held beliefs are the relevant parameters. Both of these exercises produce slightly lower estimates than Table 7, but well within a margin of statistical errors. This table suggests that the estimates of VSL are quite robust to alternative decision-making rules on migration with the estimates ranging between $0.16 million to $0.32 million with the logarithmic specification and $0.35 million to $0.61 million with the levels specifications.

# **7 Why is expected mortality rate so high?**

Section 6.2 establishes that the estimated VSL are reasonable and that misinformation actually has led to lower migration in this context. At the implied willingness to trade off earnings for mortality rate, migration is suppressed because of extremely high expectations of mortality rate relative to the truth. In this section, I show that the high mortality rate expectation is a consequence of over-inference by potential migrants in response to actual migrant deaths rather than misreporting or an artifact of data collection method.

The instrumental variables estimate of the VSL and the migration elasticities are consistent even though the expectations are measured with error. The instrumental variables estimate also solves any measurement issue that can be modeled as an additive component (either in logarithmic or in levels of

> 40Interestingly, the estimates of VSL from Greenstone, Ryan, and Yankovich (2014) ($0.18 million to $0.83 million in 2014 US$) are more in line with those from this study. However the VSL is expected to be much lower among US soldiers, who probably have higher preference for risky activities, than the average American. In fact, even within the soldiers, the authors find a lower VSL for those taking risky jobs.

21