Estimation of the Value of Statistical Life in Chile and Extrapolation to Other Latin American Countries

Abstract

This study uses the hedonic wage method to estimate the value of statistical life (VSL) in Chile and then extrapolates this value to different Latin American countries. The data are obtained from the National Socioeconomic Characterization Survey (Encuesta de Caracterización Socioeconómica Nacional, CASEN 2013), which includes information on socioeconomic and labor variables at the individual level. Records of fatal and nonfatal occupational risk in each economic sector are obtained from the Superintendency of Social Security (Superintendencia de Seguridad Social). The results of the best hedonic wage estimate for the Chilean case (which corrects for endogeneity and selection bias) show that the VSL is US$3.7 million, with a confidence interval of 95 percent ranging between US$3.4 million and US$4.0 million. A meta-analysis that relates the VSL to GDP per capita is conducted to extrapolate the findings to other Latin American countries, with average values ranging from US$0.01 million for Haiti to US$5.2 million for Puerto Rico.