Most Politicians have forgotten to tell their voters, i.e. the generic population, the value of A LIFE

Documentation note from the Danish Ministry of Finance on the value of statistical life and the value of life-year April 26, 2019

In the socio-economic analysis, the value of a statistical life may need to be calculated if an action affects the population's risk of dying or their life expectancy. This applies, for example, to projects that affect the level of air pollution or that affect the risk of road accidents. The following describes the value of statistical life as well as the value of years of life, which should be used in socio-economic analyzes. The Value of Statistical Life and the Value of a Year of Life The Value of Statistical Life (VSL) and the Value of a Year of Life (VOLY) 1 are used as a tool to help decision-makers in public policy priorities that have an impact on the population's risk of dying in a given period. The value of one statistical life is an enumeration of the population's willingness to pay to achieve a marginal reduction in the risk of dying. VSL is thus not an expression of the value of a particular person's life, but a unit of measurement that can be used for risk changes. VSL can also be defined as the total present value of the value of each future year of life (VOLY). It is important that there is consistency between VSL and VOLY in order to ensure a proper prioritization between measures that affect the entire population respectively (here the VSL is used) and measures that affect a special age group (here the VOLY is used). From a societal point of view, it is important to work with the same recommended value respectively. statistical life and the value of life years across different areas. It helps ensure a consistent prioritization of community resources. Unless a fixed recommended value of statistical life and value of life is worked, there is a risk that the value of statistical life is instead indirectly valued in the priority between different projects, and there is a risk that there is no consistency in the value of statistical life across projects and areas. A standardized valuation of VSL and VOLY - across areas and industries - entails a transparent and consistent assessment of projects. In this way, health and safety aspects for given projects can be recognized and compared with costs in the socio-economic decision without making implicit and inconsistent assumptions about VSL and VOLY. 1 VOLY is an abbreviation for “Value of a life year”. Page 2 of 4 For the purpose of socio-economic impact calculations, the Ministry of Finance uses the following values for the value of statistical life and the value of life years, respectively, cf. Table 1. Note: The values follow the recommendations of DMØR (2016), only projected at 2019 prices - which took into account that the valuation of respectively. VSL and VOLY are expected to increase with real income. The use of VSL and VOLY The willingness to pay for a reduced risk of dying is expected to be positively dependent on the consumer's real income. The calculation price for both VSL and VOLY is therefore expected to increase as the real income in society increases, cf. the recommendations in the Guide for Socio-Economic Impact Assessments (2017). Against this background, the calculation price for respectively. VSL and VOLY are projected over the considered project period, with the development in real GDP per capita2. Measures affecting the number of deaths for the entire population - The value of statistical life In cases where an action is expected to affect the number of deaths / the risk of dying for the population as a whole, it is recommended to use VSL in the socio-economic impact assessment. An example where VSL should typically be used is in connection with projects that increase traffic safety, which generally lowers the expected number of traffic fatalities. Measures affecting life expectancy - Value of life lost If an action affects life expectancy or targets specific age groups, an estimate of the number of lives saved / lost coupled with the value of VOLY should be used instead of VSL3. For example, there may be lost years of life due to air pollution, where reduced pollution today results in an expected increase in the number of life years in the future. VOLY should also be used if a measure is implemented that reduces the risk of dying among, for example, younger ones. In this case, the number of lives saved per prevented deaths all else being equal greater than for measures aimed at the elderly, since younger people generally have a longer life expectancy. 2 The figures for this can be found in the Ministry of Finance's latest convergence program. 3 Such an approach takes into account that younger people have more life expectancies left than older ones. Table 1 Recommended values for use in socio-economic analyzes Mill. DKK (2019 prices) The value of statistical life (VSL) 34 The value of life year (VOLY) 1.4 Page 3 of 4 Sensitivity analyzes Since the value of respectively. VSL and VOLY are relatively uncertain, the results of socio-economic analyzes should be treated with caution,