Analytical Framework for Examining the Value of Antibacterial Products. 3.6.4 Value of a Statistical Life (VSL)


To calculate VSL, we first took the value of a statistical life reported in 2000 dollars by age group from Aldy & Viscusi (2008).  Next, it was necessary to adjust the VSL values by age group to capture changes in real income as well as prices from 2000 to 2011.  Current data from the U.S. Bureau of Economic Analysis (BEA) show that the real personal income per capita was $28,888 in the year 2000 and $32,635 in 2012 (both in 2005 dollars), yielding a growth rate of 13 percent over this span of time.  Moreover, Hammitt & Robinson (2011) report that U.S. regulatory agencies generally assume that a 1.0 percent change in real income over time will result in a 40 to 60 percent change in the VSL.  Using the midpoint of this range (50 percent), we inflated the reported VSL values by age group by 1.065 (= 1 + [0.5 × 0.13]) to account for changes in real income from 2000 to 2011.  To adjust the VSL values for price changes, we used the general consumer price index-based inflation calculator (available on the Bureau of Labor Statistics website) that shows an average price increase of approximately 31 percent over the same time period.  We then calculated the age-specific VSLY and apply it to the estimated number of years of life lost for each condition.

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