Jump to ContentJump to Main Navigation
Show Summary Details

Journal of Benefit-Cost Analysis

See all formats and pricing

Skills of the trade: valuing health risk reductions in benefit-cost analysis

Lisa A. Robinson
  • Corresponding author
  • Senior Fellow, Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School, USA
  • Email:
/ James K. Hammitt
  • Harvard University (Center for Risk Analysis), USA and Toulouse School of Economics (LERNA-INRA), France
Published Online: 2013-03-28 | DOI: https://doi.org/10.1515/jbca-2012-0006


Many public policies and private actions affect the risk of injury, illness, or death, yet changes in these risks are not easily valued using market prices. We discuss how to value these risk reductions in the context of benefit-cost analysis. We begin with a pragmatic focus, describing the analytic framework and the approaches currently used for valuation, including estimates of willingness to pay, cost of illness, and monetized quality-adjusted life years. We then turn to some conceptual issues that illustrate areas in need of further exploration.

Keywords: benefit-cost analysis; cost of illness; health risk valuation; value per statistical life; willingness to pay; quality-adjusted life year


  • Adler, M. A., & Posner, E. A. (2006). New foundations for benefit-cost analysis. Cambridge, MA: Harvard University Press.

  • Alberini, A., & Kahn, J. R. (Eds.) (2006). Handbook on contingent valuation. Cheltenham UK and Northampton MA: Edward Elgar.

  • Aldy, J. E., & Viscusi, W. K. (2007). Age differences in the value of statistical life: revealed preference evidence. Review of Environmental Economics and Policy 1(2), 241–260.

  • Arias, E. (2010). United States life tables, (2006). National Vital Statistics Reports 58(21). Centers for Disease Control and Prevention, U.S. Department of Health and Human Services. [PubMed]

  • Bateman, I. J., Carson, R.T., Day, B., Hanemann, M., Hanley, N., Hett, T., et al. (2002). Economic valuation with stated preference techniques. Cheltenham UK and Northampton MA: Edward Elgar.

  • Bergstrom, T. C. (1982). When is a man’s life worth more than his human capital? In: M. Jones-Lee (Ed.), The value of life and safety. Amsterdam: North Holland.

  • Bergstrom, T. C. (2006). Benefit-cost in a benevolent society. American Economic Review 96(1), 339–351. [Crossref]

  • Blomquist, G. (2004). Self-protection and averting behavior, values of statistical lives, and benefit cost analysis of environmental policy. Review of the Economics of the Household 2, 89–110.

  • Boardman, A. E., Greenberg, D. H., Vining, A. R., & Weimer, D. L.. (2011). Cost-benefit analysis: concepts and practices. Upper Saddle River, NJ: Pearson.

  • Bosworth, R., Cameron, T. A., & DeShazo, J. R. (2010). Is an ounce of prevention worth a pound of cure? comparing demand for public prevention and treatment policies. Medical Decision Making 30(4), E40–E56.

  • Cameron, T. A. (2010). Euthanizing the value of a statistical life. Review of Environmental Economics and Policy 4(2), 161–178.

  • Carson, R. T. (2012). Contingent valuation: a comprehensive bibliography and history. Cheltenham UK and Northampton MA: Edward Elgar.

  • Champ, P. A., Boyle, K. J., & Brown, T. C. (Eds.) (2003). A primer on non-market valuation. Boston MA: Kluwer Academic Press.

  • Cropper, M., Hammitt, J. K., & Robinson, L. A. (2011). Valuing mortality risk reductions: progress and challenges. Annual Review of Resource Economics 3, 313–336.

  • Cropper, M., & Morgan, M. G. (2007). SAB Advisory on EPA’s issues in valuing mortality risk reduction. Memorandum to EPA Administrator Stephen L. Johnson from the EPA Science Advisory Board and Environmental Economics Advisory Committee. (EPA-SAB-08-001.)

  • European Commission. (2009). Impact Assessment Guidelines. SEC(2009) 92.

  • Finkelstein, E. A., Corso, P. S., & Miller, T. R. (2006). The incidence and economic burden of injuries in the United States. Oxford and New York: Oxford University Press.

  • Freeman, A. M. III. (2003). The measurement of environmental and resource values: theory and methods (2nd ed.), Washington D. C.: Resources for the Future.

  • Grosse, S. D., Krueger, K. V., & Mvundura, M. (2009). Economic productivity by age and sex: 2007 estimates for the United States. Medical Care 47(7), S94–S103. [Crossref]

  • Hammitt, J. K. (2000). Valuing mortality risk: theory and practice. Environmental Science and Technology 34, 1396–1400.

  • Hammitt, J. K. (2002). QALYs versus WTP. Risk Analysis 22(5), 985–1001. [Crossref]

  • Hammitt, J. K. (2007). Valuing changes in mortality risk: lives saved versus life years saved. Review of Environmental Economics and Policy 1(2), 228–240.

  • Hammitt, J. K. (2009). Response: saving lives: benefit-cost analysis and distribution. University of Pennsylvania Law Review PENNumbra 157, 189–199.

  • Hammitt, J. K., & Robinson, L. A. (2011). The income elasticity of the value per statistical life: transferring estimates between high and low income populations. Journal of Benefit-Cost Analysis 2, Art. 1.

  • Hanemann, W. M. (1991). Willingness to pay and willingness to accept: how much can they differ? American Economic Review 81, 635–647.

  • Haninger, K., & Hammitt, J. K. (2011). Diminishing willingness to pay per quality-adjusted life year: valuing acute foodborne illness. Risk Analysis 31(9), 1363–1380. [Crossref]

  • Hirth, R. A., Chernew, M. E., Miller, E., Fendrick, A. M., & Weissert, W. G. (2000). Willingness to pay for a quality-adjusted life year: in search of a standard. Medical Decision Making 20, 332–342. [Crossref]

  • HM Treasury. (2003). The green book: appraisal and evaluation in central government. London: TSO. (Includes 2011 updates.)

  • Horowitz, J. K., & McConnell, K. E. (2002). A review of WTA/WTP Studies. Journal of Environmental Economics and Management 44(3), 426–447. [Crossref]

  • Hunt, A., & Ferguson, J. (2010). A review of recent policy-relevant findings from the environmental health literature. Prepared for the Organisation for Economic Co-Operation and Development. ENV/EPOC/WPNEP(2009)9/FINAL.

  • Institute of Medicine. (2006). Valuing health for regulatory cost-effectiveness analysis. In: W. Miller, L. A. Robinson & R. S. Lawrence. (Eds.), Washington, D.C.: The National Academies Press.

  • Johnson, F. R., Fries, E. E., & Banzhaf, H. S. (1997). Valuing morbidity: an integration of the willingness-to-pay and health-status index literatures. Journal of Health Economics 16, 641–665. [Crossref]

  • Jones-Lee, M. W. (1991). Altruism and the value of other people’s safety. Journal of Risk and Uncertainty 4(2), 213–219. [Crossref]

  • Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). Anomalies: the endowment effect, loss aversion, and status quo bias. Journal of Economic Perspectives 5(1), 192–206.

  • Kling, C. L., & Swackhamer, D. L. (2011). Review of ‘valuing mortality risk reductions for environmental policy: a white paper’ (December 10, 2010). Memorandum to Lisa P. Jackson, EPA Administrator from the EPA Science Advisory Board and Environmental Economics Advisory Committee. EPA-SAB-11-011.

  • Knetsch, J. L. (2010). Values of gains and losses: reference states and choices of measure. Environment and Resource Economics 46(2), 179–188.

  • Krupnick, A. (2007). Mortality-risk valuation and age: stated preference evidence. Review of Environmental Economics and Policy 1(2), 261–282.

  • Lipscomb, J., Drummond, M., Fryback, D., Gold, M., & Revicki, D. (2009). Retaining, and enhancing, the QALY. Value in Health 12(Supp. 1), S18–S26.

  • Lindhjem, H., Navrud, S., Braathen, N. A., & Biausque, V. (2011). Valuing mortality risk reductions from environmental, transport, and health policies: a global meta-analysis of stated preference studies. Risk Analysis 31(9), 1381–1407. [Crossref]

  • Lund, J. L., Yabroff, K. R., Ibuka, Y., Russell, L. B., Barnett, P. G., Lipscomb, J., ... Brown, M. L. (2009). Inventory of data sources for estimating health care costs in the United States. Medical Care 47(7), S120–S126.

  • Murray, C. J. L., & Lopez, A. D. (Eds.) (1996). The global burden of disease: a comprehensive assessment of mortality and disability from diseases, injuries, and risk factors in 1990 and projected to 2020. Cambridge: Harvard University Press.

  • National Academies. (2008). Estimating mortality risk reduction and economic benefits from controlling ozone air pollution. Committee on estimating mortality risk reduction benefits from decreasing tropospheric ozone exposure. Washington, D.C.: National Academies Press.

  • NERA Economic Consulting. (2011). Updating the VPF and VPIs: phase 1: final report. Prepared for the United Kingdom Department for Transport.

  • Organisation for Economic Co-operation and Development. (2012). Mortality risk valuation in environment, health and transport policies. Paris: OECD Publishing.

  • Robinson, L. A. (2007). How U.S. government agencies value mortality risk reductions. Review of Environmental Economics and Policy 1(2), 283–299.

  • Robinson, L. A. (2009). Valuing lives, valuing risks, and respecting preferences in regulatory analysis. Regulation and Governance 3(3), 298–305.

  • Robinson, L. A., & Hammitt, J. K. (2011a). Valuing health and longevity in regulatory analysis: current issues and challenges. In: D. Levi-Faur (Ed.), The handbook of the politics of regulation. Cheltenham and Northampton: Edward Elgar.

  • Robinson, L. A., & Hammitt, J. K. (2011b). Behavioral economics and the conduct of benefit-cost analysis: towards principles and standards. Journal of Benefit-Cost Analysis 2(2), Art. 5.

  • Shaw, J. W., Johnson, J. A., & Coons, S. J. (2005). US valuation of the EQ-5D health states: development and testing of the D1 valuation model. Medical Care 43, 203–220. [Crossref]

  • Sullivan, P. W., & Ghushchyan, V. (2006). Preference-based EQ-5D index scores for chronic conditions in the United States. Medical Decision Making 26(4), 410–420. [Crossref]

  • Svensson, M., & Johansson, M. V. (2010). Willingness to pay for private and public road safety in stated preference studies: why the difference? Accident Analysis and Prevention 42, 1205–1212.

  • Thorat, T., Cangelosi, M., & Neumann, P. J. (2012). Skills of the trade: the Tufts cost-effectiveness analysis registry. Journal of Benefit-Cost Analysis 3(1), Art. 1.

  • Treasury Board of Canada, Secretariat. (2007). Canadian cost-benefit analysis guide: regulatory proposals (Interim).

  • Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: heuristics and biases. Science 185(4157), 1124–1131.

  • US Department of Transportation. (2011). Treatment of the economic value of a statistical life in departmental analyses – 2011 interim adjustment. Memorandum to Secretarial Officers and Modal Administrators from P. Trottenberg, Assistant Secretary For Transportation Policy, and R. Rivkin, General Counsel.

  • US Environmental Protection Agency. (2010a). Valuing mortality risk reductions for environmental policy: a white paper (Review Draft). Prepared by the National Center for Environmental Economics for consultation with the Science Advisory Board – Environmental Economics Advisory Committee.

  • US Environmental Protection Agency. (2010b). Guidelines for preparing economic analysis. EPA 240-R-10-001.

  • US Office of Management and Budget. (2003). Circular A-4: regulatory analysis.

  • Van Houtven, G., Powers, J., Jessup, A., & Yang, J.-C. (2006). Valuing avoided morbidity using meta-regression analysis: what can health status measures and QALYs tell us about WTP? Health Economics 15, 775–795. [PubMed] [Crossref]

  • Viscusi, W. K., & Aldy, J. E. (2003). The value of a statistical life: a critical review of market estimates throughout the world. Journal of Risk and Uncertainty 27(1), 5–76. [Crossref]

  • Viscusi, W. K. (2009). The devaluation of life. Regulation and governance 3, 103–127.

  • Willig, R. D. (1976). Consumer’s surplus without apology. The American Economic Review 66(4), 589–597.

  • Yabroff, K. R., Brown, M. L., Lawrence, W. F., Barnett, P. G., & Lipscomb, J. (Eds.). (2009). Health care costing: data, methods, future directions. Medical Care 47(7), Supplement 1.

  • Zeckhauser, R., & Shepard, D. (1976). Where now for saving lives? Law and Contemporary Problems 40(4), 5–45. [Crossref]

About the article

Corresponding author: Lisa A. Robinson, Senior Fellow, Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School, USA

Published Online: 2013-03-28

Citation Information: Journal of Benefit-Cost Analysis, ISSN (Online) 2152-2812, ISSN (Print) 2194-5888, DOI: https://doi.org/10.1515/jbca-2012-0006. Export Citation

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

Lisa A. Robinson and James K. Hammitt
Health Economics, 2015, Page n/a
Lisa A. Robinson and James K. Hammitt
Risk Analysis, 2015, Page n/a

Comments (0)

Please log in or register to comment.
Log in