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The extensive literature in this field mostly uses econometric analysis to value mortality riskand the ‘hedonic wage’ by estimating compensating differentials for on-the-job risk exposurein labour markets; in other words, determining what dollar amount would be accepted by anindividual to induce him/her to increase the probability of death or morbidity by a particularpercentage. Viscusi and Aldy (2002), in a summary of mortality studies, found the VSLranged between US$4 million and US$9 million with a median of US$7 million (in year 2000US dollars), similar but marginally higher than the VSL derived from studies of US productand housing markets. They also reviewed a parallel literature on the implicit value of the riskof non-fatal injuries.Weaknesses in the WTP approach, as with human capital approaches to valuing life andwellbeing, are that there can be substantial variation between individuals. Extraneousinfluences in labour markets such as imperfect information, income/wealth or powerasymmetries can cause difficulty in correctly perceiving the risk or in negotiating anacceptably higher wage in wage-risk trade off studies, for example.As DALYs are enumerated in years of life rather than in whole lives it is necessary tocalculate the Value of a ‘Statistical’ Life Year (VSLY) based on the VSL. This is doneusing the formula: 14VSLY = VSL / Σ i=0,…,n-1 (1+r) iWhere: n = years of remaining life, andr = discount rateClearly there is a need to know n (the years of remaining life), and to determine anappropriate value for r (the discount rate). There is a substantial body of literature, whichoften provides conflicting advice, on the appropriate mechanism by which costs should bediscounted over time, properly taking into account risks, inflation, positive time preferenceand expected productivity gains. In reviewing the literature, Access Economics (2008) foundthe most common rate used to discount healthy life was 3% and this had a strong rationale(see next section 2.3.7). Access Economics (2008) recommended an average VSL of$6.0 million in 2006 Australian dollars ($3.7 million to $8.1 million).This equates to an average VSLY in 2006 of $252,014 ($155,409 to $340,219), using adiscount rate of 3% over an estimated 40 years remaining life expectancy. 15Inflating the 2006 VSLY value to 2008 dollars by multiplying it by two years of inflation(2.9% in each year, from the Access Economics Macroeconomic model) results in abase case of $266,843 with lower and upper bounds of $164,553 and $360,238.However, from this gross value, Access Economics deducts all costs borne by theindividual, reflecting the source study VSL estimates, to avoid double counting. Thisprovides a different net VSLY for different conditions (and for different age-gendergroups).Since Access Economics (2008) was published, the Department of Finance andDeregulation have also provided an estimate of the VSLY, which appears to represent a14 The formula is derived from the definition:VSL = ΣVSLYi/(1+r)^i where i=0,1,2….nwhere VSLY is assumed to be constant (ie. no variation with age).15 This assumption relates to the average years of life remaining for people included in VSL studies, not the yearsof life remaining for people with TBI and SCI.49