Life quality index for the estimation of societal willingness-to-pay for safety

The engineering and management of human safety is an important societal objective that includes extensive efforts by governments, both legislative and administrative, to enhance the health and safety of the public. Although the achievement of safety goals depend primarily on individuals and organizations responsible for safety, much support is drawn from expertise in diverse scientific and engineering disciplines. The activities range from structural safety (dams, tunnels, bridges to tall buildings) to safe operation, of hazardous industrial installations (energy generation facilities, LNG terminals, petrochemical plants) to transportation systems (airline, rail, car safety) to technologies designed to minimize adverse impacts on the environment. All these activities are crucially concerned, with risk: with the likelihood and the probable effects of various measures on life and health. We have developed a unified rationale and a clear basis for effective strategic management of risk across diverse sectors. Safety is an important objective in society but it is not the only one. The allocation of society's resources devoted to safety must be continually appraised in light of competing needs, because there is a limit on the resources that can be expended to extend life. The paper presents the Life Quality Index (LQI) as a tool for the assessment of risk reduction initiatives that would support the public interest and enhance safety and quality of life. The paper provides an intuitive reformulation of the LQI as equivalent to a valid utility function that is consistent with the principles of rational decision analysis. The LQI is further refined to consider the issues of discounting of life years, competing background risks, and population age and mortality distribution. The LQI is applied to quantify the societal willingness-to-pay, which is an acceptable level of public expenditure in exchange for a reduction in the risk of death that results in improved life-quality. (C) 2003 Elsevier Ltd. All rights reserved.