Volume : 5, Issue : 8, AUG 2019

UNDERSTANDING THE VALUE OF STATISTICAL LIFE IN ROAD ACCIDENT

SIDIQ, OKWUDILI BEN

Abstract

This study elucidates on the value of statistical life in road accident. 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 isbased on individuals’ willingness to pay (WTP) which assumes that individuals’ preferences are the basis for economicwelfare. Since road accidents represent a huge economic cost; many of these accidents are preventable and by preventingthem, there is decreasing waste of scarce resources that can be used to increase income and improve welfare. Economistsoften refer to the monetary value of reducing mortality risks as the value of life which implies that human life can be valuedwhile it should be priceless. Therefore, it should not be interpreted as how many individuals are willing to pay to save anidentified life. Hence, human capital approaches to individuals’ willingness to pay and to value of statistical life.

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