When looking at the value of anything, we can take two approaches. The first approach: straight forward reasoning. If a bottle of water costs slightly over two cents to make, then its value should be right around that amount. The second: the free market approach. If people are willing to pay $4.25 for a bottle of water at the movie theater, then the bottle of water should be valued at $4.25. [Read more…]
In the previous blog posts, I mention the public relations-controversy that comes with making an age adjustment to the Value of Statistical Life (VSL). The VSL primarily impacts government agencies, and government agencies are heavily influenced by public opinion. In this blog post, I will look at the Clean Air Act to demonstrate how the EPA adjusted VSL for age, how the public reacted to the adjustment and why the public had that reaction.
My research began with the question of whether to adjust the Value of Statistical Life (VSL) for age or not. After conducting a good portion of my research, I learned that the VSL may not be the right statistic to use for its intended purpose. [Read more…]
The guiding principle of Microeconomics is that an activity should be continued until the reward of an additional unit of that activity (marginal benefit) equals the cost of an additional unit of that activity (marginal cost). While the idea of continuing an activity until there is no net benefit seems like commonsense, the difficulty comes when giving non-monetary benefits and costs a monetary value. One of the most common and controversial examples of a non-monetary benefit/cost is human life.