Earlier this year at the Society for Benefit Cost Analysis conference, I had the opportunity to listen to a representative from the Consumer Product Safety Commission (CPSC) talk about how they were approaching the idea of the Value of a Statistical Life (VSL) for children.
To be clear, VSL is not a measure of how valuable human life is. VSL is an estimate for how much we are willing to pay for reductions in the risk of death. For example, we require seat belts in cars because they are relatively low cost and reduce the probability of death quite substantially, but we do not have traffic lights at every single city intersection because that cost is too high for not enough risk reduction. For CPSC, having an accurate estimate of VSL is important for deciding whether new regulations are efficient.
VSL represents how much an average person would be willing to pay for a reduction in the risk of their own death. An individual with limited resources has to make decisions about how to spend those resources, and VSL quantifies how people make these tradeoffs using labor market data.
This is where issues arise when trying to figure out VSL for children. Children don’t have the same autonomy when it comes to decisions about their safety or how they spend resources. This makes it impossible to calculate their VSL the same way we do for adults.
One way we could approach this problem would be to ignore it and just assume children have the same VSL as adults. The issue with this is that most people would agree that we value risk reductions for children higher than we do for adults–we are willing to pay more to save a child’s life than we would to save the life of an adult.
The question then becomes the following: how much higher do we value risk reduction for children?
By reframing the question this way, we can use the same methods we use to calculate the adult VSL. The key difference is we are figuring out how much adults are willing to pay to reduce the risk of death for children.
One way we can do this is by measuring things like how much more an extra safe car seat is worth compared to an average car seat. This will tell us how much more people are willing to spend on childproofing that reduces risk of death for a child.
Estimates from the economic research on the topic have suggested that the range for child VSL is between 1.5 and 3 times the adult VSL. For the time being, CPSC has decided to use twice the adult VSL as their estimate for child VSL. Given that they just chose a round number in the middle of the range, this might be subject to change upon further research.
There are still plenty of remaining questions about child VSL. Should there be a sliding scale between 0 and 18 years old? Is there a better way to estimate it than the willingness to pay of adults?
It is an open topic of research, and one that is extremely important to get right. Overvaluing VSL means wasting resources on regulations that are largely ineffective, while underestimating it means living in a riskier world than we would prefer. Hopefully as more researchers begin exploring this topic, we can arrive at a well-thought-out and accurate consensus.