Risky Transportation Choices and the Value of Statistical Life

Abstract

This paper exploits an unusual transportation setting to generate some of the first revealed preference value of a statistical life (VSL) estimates from a low-income setting. We estimate the trade-offs individuals are willing to make between mortality risk and cost as they travel to and from the international airport in Sierra Leone (which is separated from the capital Freetown by a body of water). We observe travelers choosing among multiple transport options - namely, ferry, helicopter, hovercraft, and water taxi. The setting and original dataset allow us to address some typical omitted variable concerns, and also to compare VSL estimates for travelers from dozens of countries, including both African and non-African countries, all facing the same choice situation. The average VSL estimate for African travelers in the sample is US$577,000 compared to US$924,000 for non-Africans. Individual characteristics, particularly job earnings and fatalistic attitudes, can largely account for this variation in the estimated VSL, but there is little evidence that estimates are driven by individuals' lack of information or predicted life expectancy. We estimate a large income elasticity of the VSL of +1.77. These VSL estimates fill an important gap in the existing literature, and can be used to inform public policy, including current debates within Sierra Leone regarding the desirability of constructing new transportation infrastructure.