The Value of a Statistical Life Under Changes in Ambiguity

Han Bleichrodt (1, 2) , Christophe Courbage (3) , Béatrice Rey (4)

1 Erasmus School of Economics
2 ANU - Australian National University
3 HES-SO - University of Applied Sciences and Arts Northwestern Switzerland
4 GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne

The value of a statistical life (VSL) is a key parameter in the analysis of government policy. Most policy decisions are made under ambiguity. This paper studies the effect of changes in ambiguity perception on the value of a statistical life (VSL). We propose a definition of increases in ambiguity perception based on Ekern’s (1980) definition of increases in risk. Ambiguity aversion alone is not sufficient to lead to an increase in the VSL when the decision maker perceives more ambiguity. Our results highlight the importance of higher order ambiguity attitudes, particularly ambiguity prudence.

Mots clés: smooth ambiguity model; prudence; neoadditive preferences; Value of a statistical life; ambiguity

Domaines: Economies et finances

Han Bleichrodt, Christophe Courbage, Béatrice Rey. The Value of a Statistical Life Under Changes in Ambiguity. 2018. ⟨halshs-01943887⟩