Modern business uses cost-benefit analysis. Economists use it to help determine what options and decisions should be made. To determine the best course of action, the analysis will assess the associated costs and benefit. A cost-benefit analysis of any government initiative is performed to determine the financial viability. Models are usually developed and then evaluated to make crucial decisions. The cost-benefit analysis is used frequently to find initiatives that will improve people’s lives and lower risk when it comes down to the valuation human life. The value of an statistical life is generally accepted as the accepted concept. This is why this paper focuses on how this idea contributes to cost/benefit evaluations.
The statistic life’s value is defined by the marginal rate at which there can be substitution of mortality risk with wealth or income. This concept identifies how much people will spend in order to reduce their mortality risk. Hammitt (2017, p. 7) argues that government actions to reduce risk can be evaluated using cost-benefit analyses that take into account the statistical value of life. These views were supported by Viscusi and Masterman (2017) research, which argues that the VOSL doesn’t quantify life’s worth. The VOSL, according to the authors, determines how much a person would pay to assume a given risk level. The authors also attempt to show that risk reduction is not something people pay when they accept certain levels of risk. This evaluation will focus on producing an extensive report to answer the question of whether statistical life (VOSL) is sufficient to determine the life’s value. As methods of valuing the life, this paper will use the human capital approach along with the willingness-to pay approach.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
