Estimating the Value of Statistical Life in a Road Safety Context Based on the Contingent Valuation Method

Abstract

A cost-benefit analysis in a road safety context fundamentally analyzes the advantage of higher safety or lower risk. It can help determine if increasing spending on road safety programs is cost-effective. This study estimates the value of statistical life (VSL) - the amount of money that might be justified to save one person's life. The VSL is calculated using the willingness to pay (WTP) data obtained through a contingent valuation survey. Three discrete choice models are developed: log-logistic, log-normal, and Weibull. The log-logistic model outperforms the log-normal and Weibull models, comparing Akaike's Information Criterion (AIC) and Bayesian Information Criterion (BIC) values. We consider the log-logistic model's mean and median WTP values to estimate the VSL value in the Ethiopian road transport safety context. The VSL estimate in the Ethiopian road transport safety context is 53.52 million ETB (USD 1.07 million). The respondents' median WTP is ETB 714.44 (USD 14.23). Although the study is in Ethiopia, the findings can be applied to other low- and middle-income countries (LMICs) for the same purpose with modifications. The research findings will aid in a better understanding of the economic efficiencies of increased spending on road safety initiatives. Future research could compare current trends in road safety investment to the amount that should be spent based on the economic justifications from this study.