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None of the existing methods of evaluating loss or saving life, or assessing an increase or reduction in accidents resulting from investment projects, is satisfactory for a number of reasons. This is so chiefly because they are all inconsistent with the Pareto base of existing allocation theory and benefit-cost analysis. Strict application of the Pareto principle to changes in accidents and fatalities involves a calculation of the compensating variation associated with the changes in risk bearing regarded as external effects. Several of these external effects are discussed at length.
E. J. Mishan (Thu,) studied this question.