Citation

Milligan C, Kopp A, Dahdah S, Montufar J. Accid. Anal. Prev. 2014; 71C: 236-247.

Affiliation

University of Manitoba, Canada.

Copyright

(Copyright © 2014, Elsevier Publishing)

DOI

10.1016/j.aap.2014.05.026

PMID

24952315

Abstract

We model a value of statistical life (VSL) transfer function for application to road-safety engineering in developing countries through an income-disaggregated meta-analysis of scope-sensitive stated preference VSL data. The income-disaggregated meta-analysis treats developing country and high-income country data separately. Previous transfer functions are based on aggregated datasets that are composed largely of data from high-income countries. Recent evidence, particularly with respect to the income elasticity of VSL, suggests that the aggregate approach is deficient because it does not account for a possible change in income elasticity across income levels. Our dataset (a minor update of the OECD database published in 2012) includes 123 scope-sensitive VSL estimates from developing countries and 185 scope-sensitive estimates from high-income countries. The transfer function for developing countries gives VSL=1.3732E-4×(GDP per capita)^2.478, with VSL and GDP per capita expressed in 2005 international dollars (an international dollar being a notional currency with the same purchasing power as the U.S. dollar). The function can be applied for low- and middle-income countries with GDPs per capita above $1268 (with a data gap for very low-income countries), whereas it is not useful above a GDP per capita of about $20,000. The corresponding function built using high-income country data is VSL=8.2474E+3×(GDP per capita)^.6932; it is valid for high-income countries but over-estimates VSL for low- and middle-income countries. The research finds two principal significant differences between the transfer functions modeled using developing-country and high-income-country data, supporting the disaggregated approach. The first of these differences relates to between-country VSL income elasticity, which is 2.478 for the developing country function and.693 for the high-income function; the difference is significant at p<0.001. This difference was recently postulated but not analyzed by other researchers. The second difference is that the traffic-risk context affects VSL negatively in developing countries and positively in high-income countries. The research quantifies uncertainty in the transfer function using parameters of the non-absolute distribution of relative transfer errors. The low- and middle-income function is unbiased, with a median relative transfer error of -.05 (95% CI: -.15 to.03), a 25th percentile error of -.22 (95% CI: -.29 to -.19), and a 75th percentile error of.20 (95% CI:.14 to.30). The quantified uncertainty characteristics support evidence-based approaches to sensitivity analysis and probabilistic risk analysis of economic performance measures for road-safety investments.

Language: en