medical costs) do not exist for many of the health outcomes associated with air pollution in epidemiological studies. For example, there are few studies of WTP to avoid the discomfort associated with a hospital admission or to reduce the risk of a heart attack or stroke. For these outcomes, the unit values typically used in EPA analyses reflect medical costs and lost earnings.

Implications of Monetization for Estimation of Health Benefits

Does the monetization of health benefits imply that health benefits estimates should be reported in a particular way, such as by income, age, or health status? According to economic theory, WTP to reduce risk of death and WTP to avoid illness should increase with income. For equity reasons, however, unit health values are currently not varied according to the income of the affected population. The relation between WTP and income is used only to adjust unit health values over time to reflect the impact of income growth on the value of avoided morbidity or death. Therefore, for purposes of monetization, health benefits do not need to be reported by income group.

For chronic illnesses and mortality, one might expect WTP to vary with age and possibly health status and conclude that health benefits (avoided cases) should be estimated and reported by these factors. There is no evidence that WTP to reduce risk of death varies with current health status (Alberini et al. 2002; Krupnick et al. 2002). However, statistical lives saved might need to be reported by age group with estimates of remaining life expectancy. The empirical literature suggests that WTP to reduce risk of death and hence the VSL eventually decline with age (Jones-Lee et al. 1985; Krupnick et al. 2002). To allow for the possibility that the VSL varies with age, estimates of statistical lives saved by air pollution control programs should be presented by the age of the beneficiaries.

The remaining life expectancy for each age group must also be reported if mortality reductions are monetized using the “value of a statistical life-year” (VSLY) approach. To illustrate this approach, suppose that the VSL is $5 million and that the average age of people receiving this benefit is 40. If remaining life expectancy at age 40 is 35 years and the interest rate is zero, then the VSLY is approximately $140,000. The value of preventing the death of an 80-year-old, with 8 years of remaining life expectancy, would be 8 times $140,000 or $1.2 million. Thus, applying the VSLY re-



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