Estimating Mortality and Morbidity Impacts of Air Pollution Policy Using Value of Statistical Life Model
Overview
This paper examines the application of the Value of a Statistical Life (VSL) model to evaluate the economic impacts of government policies aimed at reducing air pollution. The author argues that understanding the tradeoffs between income and mortality risk is essential for cost-benefit analysis of environmental health policies, and presents the theoretical framework underlying VSL calculations based on individual utility functions.
What this essay covers
- Introduction: Air pollution as an environmental health risk and the need for economic evaluation tools
- Literature Review: VSL model conceptualization and government policy implications
- Theoretical Framework: Mathematical derivation of VSL through utility maximization and risk substitution rates
Preview
HEALTH ECONOMICS
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Health Economics
Air pollution is a severe environmental health risk affecting developed countries, especially in large cities. There are significant links between concentrations of air pollution and mortality and morbidity rates. Air pollutants are a major risk factor for respiratory and cardiovascular mortality and morbidity. However, any government intervention to improve air quality requires a cost-benefit analysis tool to appraise environmental policy alternatives. The economic evaluation of mortality and morbidity effects is a crucial input to cost-benefit analysis. This paper uses the Value of a Statistical Life (VSL) model to estimate the mortality and morbidity impacts of a government policy to reduce air pollution.
Government policies designed to protect life and health, such as air quality regulations, come with high hidden costs. Understanding the tradeoffs between income and risk is critical to know the value of government policies to protect life and death (Sanyal et al., 2018). In order to know the proper number of resources to give a health policy, it is important first to know the value that people attach to changes in life and health risk levels. The VSL is often taken to be the value government agencies attach to human life. Instead of attaching value to individual lives, the VSL is founded on the concept that reducing risk is expensive, and agencies are likely to spend more resources than is ideal (Ortiz et al., 2009).