Inferring Living Standards from the Value of a Statistical Life
This paper explores the relationship between the value of a statistical life (VSL) and living standards, using VSL estimates to infer economic well-being across individuals and populations.
Background
Economists use the "value of a statistical life" (VSL) — what people are willing to pay for small reductions in mortality risk — to cost-benefit-analyze safety and health policies. This NBER paper turns that logic around: it argues that observed VSLs across countries can be used to infer real living standards, correcting for what official GDP misses (subsistence farming, informal economies, unpaid work). If VSL proves a reliable proxy, it could reshape how international agencies measure poverty and well-being.