CED 201
Introductory Environmental and Resource Economics
Assignment 2
Assigned: 02/21/2025
Due: 03/07/2025
1. Value of Statistical Life. (20 points) Derive an estimate of VSL using the application based
on seatbelt usage and the chance of death in a car accident below.
Problem Setup
• The annual chance of death in a car accident in PA is:
𝟏
= 𝟎. 𝟎𝟎𝟎𝟎𝟗𝟗 𝐨𝐫 𝟎. 𝟎𝟎𝟗𝟗%
𝟏𝟎𝟎𝟒𝟖
• If you do not wear your seatbelt you increase your chance of death by 60%.
• The average person takes 1,850 round-trip car trips per year.
• The median hourly wage is $28.
• The average time to buckle and unbuckle a seatbelt on a one-way trip is 10 seconds.
a. (10 points) Use the information in the setup above to derive an estimate for the Value of
Statistical Life.
b. (10 points) Does your result make sense? What things may be missing from the
problem?
Introductory Environmental and Resource Economics
Assignment 2
Assigned: 02/21/2025
Due: 03/07/2025
1. Value of Statistical Life. (20 points) Derive an estimate of VSL using the application based
on seatbelt usage and the chance of death in a car accident below.
Problem Setup
• The annual chance of death in a car accident in PA is:
𝟏
= 𝟎. 𝟎𝟎𝟎𝟎𝟗𝟗 𝐨𝐫 𝟎. 𝟎𝟎𝟗𝟗%
𝟏𝟎𝟎𝟒𝟖
• If you do not wear your seatbelt you increase your chance of death by 60%.
• The average person takes 1,850 round-trip car trips per year.
• The median hourly wage is $28.
• The average time to buckle and unbuckle a seatbelt on a one-way trip is 10 seconds.
a. (10 points) Use the information in the setup above to derive an estimate for the Value of
Statistical Life.
b. (10 points) Does your result make sense? What things may be missing from the
problem?
