Concept Architecture
Concept
Theoretically, the Value of a Statistical Life Year (VSLY) is an economic measure of the monetary value assigned to one statistical year of life gained. It is derived from the concept of the Value of a Statistical Life (VSL) and is grounded in welfare economics and expected utility theory. VSLY exists to express mortality benefits on a life-year basis, enabling comparisons between interventions that extend life by different durations and supporting cost-benefit analysis in health economics.
Mathematically, the Value of a Statistical Life Year is commonly derived by converting an estimated Value of a Statistical Life into an equivalent annual value over the expected remaining lifetime. The calculation may account for discounting when future life years are valued in present terms. VSLY therefore represents the implied monetary value of one additional statistical life year.
In practice, VSLY is estimated from published VSL estimates combined with life expectancy assumptions and appropriate discounting. It is applied in cost-benefit analyses of healthcare, public health, environmental and transport interventions where benefits are expressed as life years gained rather than avoided deaths.
Purpose
Used to monetise gains in life expectancy, compare interventions that generate different numbers of life years, undertake cost-benefit analysis, evaluate mortality reduction policies and support economic appraisal of health and public sector programmes.
Mathematical Formulae
Primary Formula
VSLY = VSL / PV(LY)
where:
- VSL = Value of a Statistical Life
- PV(LY) = present value of expected remaining life years
Supporting Formulae
Present value of remaining life years:
PV(LY) = ????? 1 / (1 + r)?
where:
- T = remaining life expectancy (years)
- r = discount rate
Related Mathematical Methods
- Discounted present value
- Value of a Statistical Life estimation
- Cost-benefit analysis
- Expected utility theory
- Willingness-to-pay estimation
- Discounting
Example
A regulatory agency adopts a Value of a Statistical Life of �9,000,000. The average remaining life expectancy is 35 years, with a discount rate of 3.5%.
The discounted present value of the remaining life years is estimated at 22.0 years.
VSLY = �9,000,000 / 22.0 = �409,091
The implied Value of a Statistical Life Year is approximately �409,000 per discounted life year.
Excel Implementation
| Function | Example Formula | Health Economics Application |
|---|---|---|
| PV | =PV(3.5%,35,-1) | Calculate the present value of remaining life years |
| NPV | =NPV(3.5%,B2:B36) | Discount annual life-year values |
| Division | =B2/B3 | Calculate VSLY from VSL and discounted life years |
| SUM | =SUM(B2:B36) | Aggregate discounted life years |
VBA (Optional)
Automate the conversion of published Value of a Statistical Life estimates into Value of a Statistical Life Year values using user-specified life expectancy and discount rates.
Sources
- Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. Oxford University Press.
- OECD. Mortality Risk Valuation in Environment, Health and Transport Policies.
- Viscusi WK. Pricing Lives: Guideposts for a Safer Society. Princeton University Press.
- Viscusi WK, Aldy JE. The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World. Journal of Risk and Uncertainty. 2003.
- ISPOR Good Practice Reports.
Related Concepts (2)
Library
Publications
1
Conjoint Analysis Applications in Health — A Checklist: A Report of the ISPOR Good Research Practices for Conjoint Analysis Task Force — Bridges, Hauber, Marshall, Lloyd, Prosser, Regier, Johnson & Mauskopf, Vol. 14, No. 4 ed., 2011 (Value in Health)
The ISPOR good-practice checklist for conjoint analysis and discrete-choice experiments in health — the stated-preference methods used to elicit patient and public preferences over treatment attributes for value assessment and priority-setting.
Journal ArticleView source →
Frequently Asked Questions (6)
What is the value of a statistical life-year?
An adaptation of the value of statistical life expressed per life-year rather than per life, adjusted for age and remaining life expectancy.
Source: Aldy & Viscusi 2008
What does the value of a statistical life-year express?
The value of a statistical life-year expresses the value of reduced mortality risk per year of life rather than per life, obtained by spreading the value of a statistical life over the years of life expected to remain. It allows the benefit of averting a death to reflect how many years are gained, so that preventing a death at a younger age, with more years remaining, carries greater value than at an older age. It adapts the whole-life measure to a per-year basis.
Source: Aldy & Viscusi 2008
How is the value of a statistical life-year derived?
It is derived from the value of a statistical life by relating the value people place on risk reductions to their remaining life expectancy, typically using data in which willingness to pay for risk change varies with age. Rather than dividing a single life value by a fixed number of years, studies estimate how the value changes over the life course and convert it to an annual equivalent. The resulting figure can then be applied to the years of life a policy is expected to save.
Source: Aldy & Viscusi 2008
Why adjust the value of a statistical life for age?
Empirical evidence suggests that willingness to pay for a mortality risk reduction is not constant over the life course, often rising into middle age and falling later, so a single whole-life value can misrepresent the benefit at different ages. Expressing value per life-year, adjusted for age and remaining expectancy, aligns the measure with the years actually at stake in a given policy. It also allows mortality benefits to be compared with health measures that count life-years.
Source: Aldy & Viscusi 2008
What are the limitations of the value of a statistical life-year?
The measure inherits the wide variation and strong assumptions of the value of a statistical life from which it is built, and adds the difficulty of estimating how value changes with age, which the evidence does not settle cleanly. Assuming a constant value per remaining year is a simplification that the age profile of willingness to pay contradicts. Valuing years by age also raises equity concerns, since it can weight policies benefiting the young above those benefiting the old.
Source: Aldy & Viscusi 2008
How does the value of a statistical life-year differ from the value of a statistical life?
The value of a statistical life attaches a single figure to preventing one death, regardless of the age or remaining life expectancy of those affected. The value of a statistical life-year instead values each year of life saved, so a policy's benefit depends on how many years it adds. The per-year measure discriminates between deaths averted at different ages, which the whole-life measure does not, and it connects more directly to health measures expressed in life-years.
Source: Aldy & Viscusi 2008
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Verified by Dr Darrin Baines
British health economist
Professional identity: darrinbaines.org
Verification date: 4 Aug 2025
Content version: 1.0.0
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