Date of Award:

5-2016

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Economics and Finance

Committee Chair(s)

Randy T. Simmons

Committee

Randy T. Simmons

Committee

Ryan M. Yonk

Committee

Chris Fawson

Committee

Ryan Bosworth

Abstract

The objective of this thesis is to explore how government policymakers use distorted Value of a Statistical Life (VSL) calculations for their personal benefit. The VSL estimates how much a large group of citizens would jointly pay to save the life a one random person from a fatal disease. The VSL is used by government agencies like the Environmental Protection Agency. Agencies use the VSL in benefit-cost analyses to help determine potentially favorable life-saving policy from wasteful policy. Despite the well-intentioned objectiveness and decisiveness of the VSL, the political framework incentivizes miscalculated and exaggerated VSL estimates. Public choice theory addresses plausible reason as to why the decades of suggested VSL inaccuracies have not been resolved by those with political power. Public choice theory explains that policymakers are self-interested people. The general public expects political leaders, however, to become self-sacrificing public servants once elected. This thesis is an example and an explanation why those in political office employ distorted VSL calculations. Specifically, those in government agencies aim to maximize budgets and regulatory control for job security. The VSL data sources, methods of estimation, and inconsistent behavioral reference points exaggerate VSL calculations. These miscalculated or purposefully inflated VSL estimates lead to large policy implications that add to government inefficiencies and impose costs on taxpayers and businesses

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