Empirical Review of the Value of Statistical Life: Application in Air Crashes

This study gaudily elucidates on the value of statistical life in air crashes. Value of statistical life is quite predominant in road crashes while limited discussions in air crashes. Since human beings are also lost in air crashes, there is need to discuss on the value of lives lost. Human capital approach has been a procedure often used to estimate the benefits realized from reduced mortality, in which the value of a person’s life is determined by this person’s market productivity. For several reasons, this approach might be no longer popular. The dominant approach nowadays is based on individuals’ willingness to pay (WTP) which assumes that individuals’ preferences are the basis for economic welfare. Since air crashes represent a huge economic cost; some of these crashes or crashes may be preventable but not as compared to road accident. There is reducing waste of scarce resources that can be used to increase income and improve welfare. Economists often refer to the monetary value of reducing mortality risks as the value of life which implies that human life can be valued while it should be priceless. Therefore, it should not be interpreted as how many individuals are willing to pay to save an identified life. Hence, human capital approaches to individuals’ willingness to pay and to value of statistical life.This study is crucial because of the socioeconomic and political worth of air travelers that are being lost during air crashes.

Keywords: value of statistical life, air crashes, accident.