As a practical matter, the VSL is successful in balancing the benefits and costs of regulation.
Many of the views that James Broughel ascribes to me are not expressed in my previous comments or in my previous work. Risk policies can have a counterproductive effect on safety when there is a great imbalance between costs and benefits, such as costs in excess of $100 million per expected life saved. Policies that pass a benefit-cost test based on the VSL on balance will enhance safety and pass an economic efficiency test. Valuing mortality risks based on the financial cost of death approach advocated by Broughel undervalues lives by an order of magnitude. Although the cost-of-death measure is appropriate for setting compensation levels for the family of the deceased, there is no valid economic theory that supports its use to value reduction of small risks of death. The practical effect of lowering the VSL is to lead to less protective government policies and a higher mortality rate. Sacrificing the lives of those currently alive is not a responsible path to enhancing the welfare of future generations.
This response is part of a seven-part series, entitled The Value of the Value of a Statistical Life.