scholarly journals What is the meaning of (statistical) life? Benefit–cost analysis in the time of COVID-19

2020 ◽  
Vol 36 (Supplement_1) ◽  
pp. S56-S63 ◽  
Author(s):  
Jonathan Colmer
Keyword(s):  
Social Benefits ◽  
Current Crisis ◽  
Mortality And Morbidity ◽  
Benefit Cost Analysis ◽  
Mortality Risks ◽  
Statistical Life ◽  
The Social ◽  
Morbidity Risks ◽  
Public Policy Decisions ◽  
Benefit Cost

Abstract Efforts to support public policy decisions need to be conducted carefully and thoughtfully. Recent efforts to estimate the social benefits of reductions in mortality risks associated with COVID-19 interventions are likely understated. There are large uncertainties over how much larger the social benefits could be. This raises questions about how helpful conventional approaches to valuing mortality and morbidity risks for benefit–cost analyses can be in contexts such as the current crisis.

The Value of the Risk to Life in the Context of Crime

2019 ◽  
Vol 10 (2) ◽  
pp. 178-205 ◽  
Author(s):  
Emilio Picasso ◽  
Mariana Conte Grand
Keyword(s):  
Negative Impact ◽  
Stated Preference ◽  
Positive Influence ◽  
Income Risk ◽  
Benefit Cost Analysis ◽  
Developed Economies ◽  
Statistical Life ◽  
Victimization Experience ◽  
Public Policy Decisions ◽  
Benefit Cost

AbstractThe value of the risk to life is a key element for benefit-cost analysis, enabling more rational public policy decisions in diverse areas as environmental, health, and crime. We value the risk to life in the context of crime using a discrete choice experiment (CE). The method has clear advantages in that it applies to the whole population and does not require vast data from labor markets, for example. Such data are not always available even in developed economies. Combining the stated preference approach with contingent valuation (CV), CE offer advantages yet to be explored in the context of crime. We demonstrate the application in a developing economy, where similar valuations are not available. The best estimate obtained for Argentina is an average of 1.5 million in 2015 US dollars per statistical life with a confidence interval ($1.1–$2.3). This result is consistent with estimates for the developed world, after appropriate transfer. We also analyze demographic factors in the risk to life, finding a positive influence of income, risk aversion, previous victimization experience and family size on the value of a statistical life, as well as a negative impact of individualism.

scholarly journals Estimating the Values of Mortality Risk Reductions in Low- and Middle-Income Countries

2017 ◽  
Vol 8 (2) ◽  
pp. 205-214 ◽  
Author(s):  
Lisa A. Robinson
Keyword(s):  
Cost Analysis ◽  
Mortality Risk ◽  
Middle Income ◽  
Benefit Cost Analysis ◽  
Mortality Risks ◽  
Middle Income Countries ◽  
Statistical Life ◽  
Benefit Cost ◽  
Value Per Statistical Life ◽  
Low And Middle Income

The value of small changes in mortality risks, generally expressed as the value per statistical life, is an important parameter in benefit-cost analysis. However, little is known about the values held by populations in low- and middle-income countries. This article introduces a symposium that includes three additional articles which explore related theory and research.

scholarly journals Appropriate Discounting for Benefit-Cost Analysis

2011 ◽  
Vol 2 (2) ◽  
pp. 1-20 ◽  
Author(s):  
David F. Burgess ◽  
Richard O. Zerbe
Keyword(s):  
Cost Analysis ◽  
Discount Rate ◽  
Cost Of Capital ◽  
Hyperbolic Discounting ◽  
Ease Of Use ◽  
Benefit Cost Analysis ◽  
The Social ◽  
Net Benefits ◽  
Benefit Cost

In order to be sensible about what discount rate to use one must be clear about its purpose. We suggest that its purpose is to help select those projects that will contribute more net benefits than some other discount rate. This approach, which is after all the foundation for benefit-cost analysis, helps to reconcile different suggested procedures for determining the discount rate. We suggest that the social opportunity cost of capital (SOC) is superior to other suggested approaches in its generality and its ease of use. We use the SOC to determine a range of real rates that vary between 6% and 8%. We suggest that approaches based on determination of preferences, which result in hyperbolic discounting, are less appropriate and less useful.

Benefit-Cost Analysis for Financial Regulation

2013 ◽  
Vol 103 (3) ◽  
pp. 393-397 ◽  
Author(s):  
Eric Posner ◽  
E. Glen Weyl
Keyword(s):  
Cost Analysis ◽  
Financial Markets ◽  
Financial Regulation ◽  
Allocative Efficiency ◽  
Social Value ◽  
Wall Street ◽  
Benefit Cost Analysis ◽  
The Social ◽  
Benefit Cost ◽  
Rule Making

Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need for quantifying the statistical cost of a crisis to trade off the risk of a crisis against loss of growth during good times. Second, we propose a framework quantifying the social value of price discovery, and highlighting which arbitrages are over- and under-supplied from a social perspective. Finally, we distinguish between insurance benefits and gambling-facilitation harms of market completion.

scholarly journals The Social Cost of Carbon, Greenhouse Gas Policies, and Politicized Benefit/Cost Analysis

2018 ◽  
Vol 6 (1) ◽  
pp. 59-76
Author(s):  
Benjamin Zycher
Keyword(s):  
Cost Analysis ◽  
Social Cost ◽  
Climate Impacts ◽  
Cost Calculation ◽  
Substantial Part ◽  
Social Cost Of Carbon ◽  
Benefit Cost Analysis ◽  
Climate Policies ◽  
The Social ◽  
Benefit Cost

Benefit/cost analysis can be a powerful tool for examination of proposed (or alternative) public policies, but, unsurprisingly, decisionmakers’ policy preferences can drive the analysis, rather than the reverse. That is the reality with respect to the Obama Administration computation of the social cost of carbon, a crucial parameter underlying the quantitative analysis of its proposed climate policies, now being reversed in substantial part by the Trump Administration. The Obama analysis of the social cost of carbon suffered from four central problems: the use of global benefits in the benefit/cost calculation, the failure to apply a 7% discount rate as required by Office of Management and Budget guidelines, the conflation of climate and GDP effects of climate policies, and the inclusion of non-climate effects of climate policies as co-benefits, as a tool with which to overcome the trivial temperature and other climate impacts of those policies. Moreover, the Obama analysis included in its “market failure” analysis the fuel price parameter that market forces are likely to incorporate fully. This Article suggests that policymakers and other interested parties would be wise to concentrate on the analytic minutia underlying policy proposals because policy analysis cannot be separated from politics.

scholarly journals Comparing the Application of CEA and BCA to Tuberculosis Control Interventions in South Africa

2019 ◽  
Vol 10 (S1) ◽  
pp. 132-153 ◽  
Author(s):  
Thomas Wilkinson ◽  
Fiammetta Bozzani ◽  
Anna Vassall ◽  
Michelle Remme ◽  
Edina Sinanovic
Keyword(s):  
South Africa ◽  
South African ◽  
Methodological Approach ◽  
Value Of Statistical Life ◽  
Policy Recommendations ◽  
Benefit Cost Analysis ◽  
Tb Control ◽  
Statistical Life ◽  
Benefit Cost ◽  
The Impact

Achieving ambitious targets to address the global tuberculosis (TB) epidemic requires consideration of the impact of competing interventions for improved identification of patients with TB. Cost-effectiveness analysis (CEA) and benefit-cost analysis (BCA) are two approaches to economic evaluation that assess the costs and effects of competing alternatives. However, the differing theoretical basis and methodological approach to CEA and BCA is likely to result in alternative analytical outputs and potentially different policy interpretations. A BCA was conducted by converting an existing CEA on various combinations of TB control interventions in South Africa using a benefits transfer approach to estimate the value of statistical life (VSL) and value of statistical life year (VSLY). All combinations of interventions reduced untreated active disease compared to current TB control, reducing deaths by between 5,000 and 75,000 and resulting in net benefits of Int$3.2–Int$137 billion (ZAR18.1 billion to ZAR764 billion) over a 20-year period. This analysis contributes to development and application of BCA methods for health interventions and demonstrates that further investment in TB control in South Africa is expected to yield significant benefits. Further work is required to guide the appropriate analytical approach, interpretation and policy recommendations in the South African policy perspective and context.

scholarly journals Valuing Mortality Risk Reductions in Global Benefit-Cost Analysis

2019 ◽  
Vol 10 (S1) ◽  
pp. 15-50 ◽  
Author(s):  
Lisa A. Robinson ◽  
James K. Hammitt ◽  
Lucy O’Keeffe
Keyword(s):  
Mortality Risk ◽  
Income Elasticity ◽  
Lower Income ◽  
Middle Income ◽  
Income Differences ◽  
Benefit Cost Analysis ◽  
Middle Income Countries ◽  
Statistical Life ◽  
The Past ◽  
Benefit Cost

The estimates used to value mortality risk reductions are a major determinant of the benefits of many public health and environmental policies. These estimates (typically expressed as the value per statistical life, VSL) describe the willingness of those affected by a policy to exchange their own income for the risk reductions they experience. While these values are relatively well studied in high-income countries, less is known about the values held by lower-income populations. We identify 26 studies conducted in the 172 countries considered low- or middle-income in any of the past 20 years; several have significant limitations. Thus there are few or no direct estimates of VSL for most such countries. Instead, analysts typically extrapolate values from wealthier countries, adjusting only for income differences. This extrapolation requires selecting a base value and an income elasticity that summarizes the rate at which VSL changes with income. Because any such approach depends on assumptions of uncertain validity, we recommend that analysts conduct a standardized sensitivity analysis to assess the extent to which their conclusions change depending on these estimates. In the longer term, more research on the value of mortality risk reductions in low- and middle-income countries is essential.

scholarly journals A benefit-cost analysis framework for prioritization of control programs for well-established invasive alien species

NeoBiota ◽  
2021 ◽  
Vol 68 ◽  
pp. 31-52
Author(s):  
Rakel Blaalid ◽  
Kristin Magnussen ◽  
Nina Bruvik Westberg ◽  
Ståle Navrud
Keyword(s):  
Ecosystem Services ◽  
Cost Analysis ◽  
Alien Species ◽  
Invasive Alien Species ◽  
Social Benefits ◽  
Benefit Cost Analysis ◽  
Control Programs ◽  
Benefit Cost ◽  
And Control ◽  
Established Species

Invasive alien species (IAS) are identified as a major threat to biodiversity and ecosystem services. While early detection and control programs to avoid establishments of new alien species can be very cost-effective, control costs for well-established species can be enormous. Many of these well-established species constitute severe or high ecological impact and are thus likely to be included in control programs. However, due to limited funds, we need to prioritize which species to control according to the gains in ecological status and human well-being compared to the costs. Benefit-Cost Analysis (BCA) provides such a tool but has been hampered by the difficulties in assessing the overall social benefits on the same monetary scale as the control costs. In order to overcome this obstacle, we combine a non-monetary benefit assessment tool with the ecosystem service framework to create a benefit assessment in line with the welfare economic underpinnings of BCA. Our simplified BCA prioritization tool enables us to conduct rapid and cheap appraisals of large numbers of invasive species that the Norwegian Biodiversity Information Centre has found to cause negative ecological impacts. We demonstrate this application on 30 well-established invasive alien vascular plant species in Norway. Social benefits are calculated and aggregated on a benefit point scale for six impact categories: four types of ecosystem services (supporting, provisioning, regulating and cultural), human health and infrastructure impacts. Total benefit points are then compared to the total control costs of programs aiming at eradicating individual IAS across Norway or in selected vulnerable ecosystems. Although there are uncertainties with regards to IAS population size, benefits assessment and control program effectiveness and costs; our simplified BCA tool identified six species associated with robust low cost-benefit ratios in terms of control costs (in million USD) per benefit point. As a large share of public funds for eradication of IAS is currently spent on control programs for other plant species, we recommend that the environmental authorities at all levels use our BCA prioritization tool to increase the social benefits of their limited IAS control budgets. In order to maximize the net social benefits of IAS control programs, environmental valuation studies of their ecosystem service benefits are needed.

scholarly journals Benefit–Cost Analysis of Community-Led Total Sanitation: Incorporating Results from Recent Evaluations

2020 ◽  
Vol 11 (3) ◽  
pp. 380-417 ◽  
Author(s):  
Mark Radin ◽  
Marc Jeuland ◽  
Hua Wang ◽  
Dale Whittington
Keyword(s):  
Case Fatality ◽  
Sub Saharan Africa ◽  
Positive Health ◽  
Benefit Cost Analysis ◽  
Statistical Life ◽  
Diarrhea Incidence ◽  
Sub Saharan ◽  
Benefit Cost ◽  
Additional Reduction ◽  
Rate Case

AbstractWe analyze the economic costs and benefits of “community-led total sanitation” (CLTS), a sanitation intervention that relies on community-level behavioral change, in a hypothetical rural region in sub-Saharan Africa with 200 villages and 100,000 people. The analysis incorporates data on the effectiveness of CLTS from recent randomized controlled trials and other evaluations. The net benefits of this intervention are estimated both with and without the inclusion of a positive health externality, that is, the additional reduction in diarrhea for an individual when a sufficient proportion of other individuals in the community construct and use latrines and thereby decrease the overall load of waterborne pathogens and fecal bacteria in the environment. We find that CLTS interventions would pass a benefit–cost test in many situations, but that outcomes are not as favorable as some previous studies suggest. The model results are sensitive to baseline conditions, including the value of time, income level used to calculate the value of a statistical life, discount rate, case fatality rate, diarrhea incidence, and time spent traveling to defecation sites. We conclude that many communities likely have economic investment opportunities that are more attractive than CLTS, and recommend careful economic analysis of CLTS in specific locations.

scholarly journals The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19

2020 ◽  
Vol 11 (2) ◽  
pp. 179-195 ◽  
Author(s):  
Linda Thunström ◽  
Stephen C. Newbold ◽  
David Finnoff ◽  
Madison Ashworth ◽  
Jason F. Shogren
Keyword(s):  
Economic Activity ◽  
Critical Parameters ◽  
Social Distancing ◽  
Benefit Cost Analysis ◽  
Statistical Life ◽  
Unknown Factor ◽  
Net Benefits ◽  
Benefit Cost ◽  
Benefits And Costs

AbstractWe examine the net benefits of social distancing to slow the spread of COVID-19 in USA. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit–cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

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