Got it, I think I misunderstood that point the first time. Yes, I am convinced that this is an issue that is worth choosing log over isoelastic for.
Yes, I agree with the first order consequence of focusing more on saving lives. The purpose of this is just to compare different approaches that only increase income, and I was just suggesting that a high set point is a sufficient way to avoid having that spill over into unappealing implications for saving lives. It is true that a very high set point is inconsistent with revealed preference VSLs, though. I don’t have a good way to resolve that. I have an intuition that low VSLs are a problem and we shouldn’t respect them, but it’s not one I can defend, so I think you’re right on this.
Agreed
I’m on board with the idea of averaging over scenarios ala Weitzman, my original thinking was that a normalizing constant would shrink the scale of differences between the scenarios and thus reduce the effect of outlier etas. But I was confusing two different concepts—a high normalizing constant would reduce the % difference between them, but not the absolute difference between them which is the important quantity for expected value.
Thanks, appreciate it! I sympathize with this for some definition of low FWIW: “I have an intuition that low VSLs are a problem and we shouldn’t respect them” but I think it’s just a question of what the relevant “low” is.
Got it, I think I misunderstood that point the first time. Yes, I am convinced that this is an issue that is worth choosing log over isoelastic for.
Yes, I agree with the first order consequence of focusing more on saving lives. The purpose of this is just to compare different approaches that only increase income, and I was just suggesting that a high set point is a sufficient way to avoid having that spill over into unappealing implications for saving lives. It is true that a very high set point is inconsistent with revealed preference VSLs, though. I don’t have a good way to resolve that. I have an intuition that low VSLs are a problem and we shouldn’t respect them, but it’s not one I can defend, so I think you’re right on this.
Agreed
I’m on board with the idea of averaging over scenarios ala Weitzman, my original thinking was that a normalizing constant would shrink the scale of differences between the scenarios and thus reduce the effect of outlier etas. But I was confusing two different concepts—a high normalizing constant would reduce the % difference between them, but not the absolute difference between them which is the important quantity for expected value.
Thanks, appreciate it! I sympathize with this for some definition of low FWIW: “I have an intuition that low VSLs are a problem and we shouldn’t respect them” but I think it’s just a question of what the relevant “low” is.