Life Value Assessment Methods in Emerging Markets: Evidence from China

Abstract

The paper explores life value assessment methods in China from both the historical and modern perspectives. The historical perspective includes the death penalty ransom approach and government pricing approach, while the modern perspective contains the human capital method and willingness-to-pay method. The human capital method measures the economic value created by people and uses it as their life assessment value, and the willingness-to-pay method evaluates peoples’ life value indirectly through the trade-off between the death risk and benefit. The paper then puts forward improvement ideas for the two modern life value assessment models and proposes possible future research directions, meanwhile providing a reference for such practical issues as compensation policymaking for industrial injuries or deaths for the sustainable development of emerging countries.

1. Introduction

Development is the first priority of emerging market countries, which are characterized by labor-intensive industries. Due to inadequate occupational safety education and protection in developing countries, industrial injuries, including deaths, are not uncommon. As human capital can become a source of sustained competitive advantage (Hall, 1993; Coff, 1997) [1,2], it is important to explore the value of human life not only for the compensation policymaking for industrial injuries or deaths, but also for the sustainable management of emerging markets.

The concept of life value has rich connotations. People often say “life is priceless”, but when practical problems such as death compensation arise in life, it is inevitable to make a reasonable assessment of the value of life. Due to the heterogeneity and extensiveness of the application scenarios, a large number of scholars have greatly enriched the life value assessment methods from different perspectives.

There are extensive studies on the value of statistical life (VSL) in developed countries. John F. Silny et al. (2011) introduced the method by which US government agencies allocate monetary value for human life according to the provisions of the three executive orders [3]. Jaithri Ananthapavan et al. (2021) analyzed the VSL research and international review papers published from 2007 to 2019 and reviewed the literature on updating the VSL recommended by the Australian policy assessment [4]. Ambróz Hájnik et al. (2021) analyzed the traffic accident rate in Slovakia from the perspective of social cost to define the value of human life [5].

There is also literature on life value assessment in emerging markets. Luis Armando Becerra-Pérez et al. (2021) analyzed the economic assessment of the health impact of PM2.5 in three Mexican cities and calculated the life expectancy benefits [6]. Ei Ei Mon et al. (2019) used the contingent valuation-payment card method to estimate the willingness of car drivers to pay for reducing the risk of death in Myanmar [7]. Anteneh Afework Mekonnen et al. (2022) estimated the value of statistical life by calculating the willingness to pay (WTP) data obtained from the contingent valuation survey in Ethiopia [8]. Bryan N. Patenaude et al. (2019) randomly selected 4000 individuals and used the contingent valuation survey to measure the statistical life year value of a region in Tanzania [9]. Sweta Bharti et al. (2022) compared WTP and VSL estimates of the use of direct payment cards and indirect statement options to reduce the death rate of motorcycle riders in India [10]. However, the research on life value assessment in China, the largest emerging market with a population of more than 1.4 billion, is relatively unsystematic. Therefore, the objective of this paper is to review and summarize the literature on life value assessment in China.

The development of life value assessment methods has generally gone through two stages. The first stage is the human capital method, and the life value of this stage is approximately represented by the economic value created by the evaluation object; i.e., the greater the economic value generated by the evaluation object, the higher the life assessment value is. The assessment method at this stage focuses more on the utility value of the evaluation object to the outside world. The second stage is the willingness-to-pay method, which measures life by examining people’s choice between the degree of death risk and the economic benefit. The assessment method at this stage pays more attention to the economic behavior of people. Thomas J. Kniesner (2019) believed that there are many possible links between the value of statistical life (VSL) and behavioral economics [11]. In addition to the above two main methods, some scholars have also applied other methods to estimate and analyze VSL. Felipe Vasquez-Lavin et al. (2022) used a hedonic wage model and pseudo-panel method to estimate the value of statistical life in Chile, Colombia, and the United States [12]. H. Spencer Banzhaf (2022) estimated the value of statistical life span through meta-analysis in America [13].

The rest of the paper includes five sections: Section 2 is a summary of historical life value assessment approaches in China; Section 3 and Section 4 review and summarize the two modern assessment models—human capital method and willingness-to-pay method; Section 5 puts forward improvement ideas for the two life value assessment methods; and Section 6 discusses limitations and possible future research directions.

2. Historical Life Value Assessment

Records related to life value assessment in Chinese history include death penalty ransom and government pricing. The death penalty ransom refers to the amount of ransom that people need to be exempted from the death penalty, which is equivalent to the price of buying their own life, i.e., an indirect assessment of the value of life. The government pricing refers to the issuance of a decree by the ruler to set the price of life for different people, i.e., to directly assess the value of life.

2.1. Death Penalty Ransom

According to the records in the “Historical Records”, the act of exonerating guilt by paying finances originated in ancient times [14]. During the period of Emperor Hui of the Han Dynasty, the finances needed to be exempted from the death penalty gradually became clear, and people could eliminate the capital crimes committed by purchasing a title of thirtieth rank [15]. When it developed to the Ming Dynasty, for the redemption of capital crimes, the law began to clearly record the conditions (including a comprehensive consideration of age, gender, status, parental support, etc.) and the ransom to be paid, which were directly measured in the currency (copper coins) at that time [16]. From the ancient times to the Ming Dynasty, there was no systematic arrangement for the payment of ransom to be exempted from the death penalty; i.e., the decree was universal to all the people who met the requirements of atonement at that time to a certain extent. In the late Ming and early Qing dynasties, the ransom paid for exemption from the death penalty began to develop from uniform pricing to tiered pricing for different groups of people. The Qing court set the price standard of the death penalty ransom according to the prisoner’s official rank. Generally speaking, the higher the social status of the prisoner, the more the death penalty ransom that needed to be paid [16].

This form of exemption from punishment by paying ransom existed for a long time in the feudal period of China and played a certain positive role in expanding the financial income of the ruling class at that time. The Qing Dynasty’s tiered pricing of the ransom required for exemption from the death penalty according to different official ranks is an improvement on the original basis. This practice fully considers the actual payment ability of each class and can improve the efficiency of collecting ransom to a certain extent.

2.2. Government Pricing

The Sixteen Laws of the Tibetan Karma regime and the Thirteen Laws of the Fifth Dalai Lama divided the whole society into nine classes, and the life value of each class corresponds to the amount of property [16]. The currency at that time was converted into CNY according to a certain ratio, and the life value of people of different strata in this period under the direct pricing of the government is shown in

Table 1. Life value of different strata in Tibetan Karma regime.

Class	Group	Legal Amount of Life	Current Value (CNY)
1st Class	Supreme Ruler	Gold equal to his body	13,440,000
2nd Class	Senior officials, etc.	300 to 400 taels of silver	225,000–300,000
3rd Class	Intermediate officials, etc.	200 taels of silver	150,000
4th Class	General officials, etc.	140 to 150 taels of silver	105,000–112,500
5th Class	Monks in monasteries, etc.	50 to 70 taels of silver	37,500–52,500
6th Class	Common people, etc.	30 to 40 taels of silver	22,500–30,000
7th Class	Government clerks, etc.	30 taels of silver	22,500
8th Class	Butchers, blacksmiths, etc.	20 taels of silver	15,000
9th Class	Women, homeless, beggars, etc.	10 taels of silver	7500

Note: The weight of Zao is calculated as 70 kg, 1 kg is calculated as 32 taels, 1 tael of gold is calculated as CNY 6000, and 1 tael of silver is calculated as CNY 750. Source: The Law of Blood Raised: The Game of Survival in Chinese History [16]. Reprinted/adapted with permission from Ref. [16]. 2003, Wu S.

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It can be seen from Table 1 that during the Karma regime and the fifth Dalai Lama in Tibet, the life value of the first-class group was about 1800 times that of the ninth-class group, and the difference in life value among people in different social classes was significant. Generally speaking, the higher the social level of an individual, the greater the life value stipulated by the government, and vice versa. This way of directly pricing groups of different classes reflects the strict hierarchical system of slavery society, but to a certain extent, it can play a positive role in the social regulation of the ruling class.

The above are the ways for estimating life value in ancient China. In modern times, the following two approaches are more widely used.

3. Human Capital Method

The idea of using the human capital method to assess the value of life first originated in William Pedi’s (1699) book Political Arithmetic, in which the following was recorded: “The benefits obtained by British seamen are about three times that of farmers, so a seaman is approximately equivalent to three farmers [17]”. William Pedi took the lead in equating the utility value created by an individual with its life value approximately. When using the human capital method to assess the value of life, it is necessary to define the scope of utility value reasonably and then build a reasonable measurement model according to the scope of utility value.

3.1. Defining the Scope of Utility Value

Regarding the definition of the scope of utility value, Wang Liang (2004) divided it into three levels: level one is the income and wealth created by the individual for himself or herself and his or her family; level two is the income and wealth created by the individual for himself or herself and the society; and level three is the sum of income and wealth created by the individual during and after his or her life for himself or herself and the society [18]. The higher the level, the wider the scope of its utility value is. From different perspectives, scholars have different interpretations of the connotation of individual utility value. Tu Wenjuan [19], Zheng Lianyuan [20], and other scholars have conducted a comprehensive analysis of the individual utility value based on their own understanding. Cheng Qizhi et al. (2011) believed that the definition of individual utility value from different research perspectives should also be treated differently, and the scope of utility value should be determined from three different perspectives, i.e., individual contribution to national wealth, life insurance application, and corporate safety investment income [21]. Mehdi Basakha et al. (2021) used the human capital method to estimate the economic value of life in Iran through data on Iranian household income and expenditure in 2015 [22]. At present, when the human capital method is used to assess life value, the academic circle has not formed a unified definition for the scope of the utility value created by the individual.

3.2. Building the Measurement Model

Due to differences in research perspectives and purposes, the measurement models established when using the human capital method to assess life value are also different. According to the evaluation object, it can be classified into macro life measurement model and micro life measurement model.

3.2.1. Macro Life Measurement Model

This type of model mainly measures the average life value of an industry, a region, or a country. The most representative scholar is British statistician William Farr [23], whose life value assessment model is as follows:

$$\mathrm{V}=\frac{\mathrm{I}-\mathrm{C}}{\mathrm{Q}}$$

where V is the value of life and I, C, and Q are total income, total consumption, and population, respectively. Considering that the income levels and consumption habits corresponding to different age groups may be quite different, in order to make the measurement model more realistic, William Farr classified people of different age groups on the basis of the above model, namely V = {V₁, V₂, …, V_n }, where 1, 2, …, n represent n different age groups, so the improved model becomes as follows:

$$\mathrm{V}={\mathrm{V}}_1+{\mathrm{V}}_2+\dots +{\mathrm{V}}_{\mathrm{n}}=\sum _{\mathrm{i}=1}^{\mathrm{n}}\frac{{\mathrm{I}}_{\mathrm{i}}-{\mathrm{C}}_{\mathrm{i}}}{{\mathrm{Q}}_{\mathrm{i}}}$$

The improved model holds that the overall life value of the society is equivalent to the sum of the life values of people of all ages, and it fully considers the differences caused by age characteristics. This idea of segmentation also provides ideas for measuring the life value of microscopic groups.

3.2.2. Micro Life Measurement Model

This type of model is mainly used to assess the life value of an individual. One of the more typical ones is the life measurement model established by Tu Wenjuan et al. (2003) based on employee casualties [19]. She believes that the utility value of employees should be composed of the following four parts: first, the contribution deficiency for both the enterprise and the country due to the casualty of the employee; second, the income deficiency for the family due to the casualty of the employee; third, the cost of employee training; fourth, the mental loss to the family due to the casualty of the employee. The resulting model is:

$$\mathrm{V}=\frac{\mathrm{D}\times \mathrm{M}}{\mathrm{N}\times \mathrm{d}}+\mathrm{D}\times \mathrm{L}+\mathrm{F}+\mathrm{P}$$

where V is the life assessment value, D is the reduction of the working days of the employee due to casualties (calculated as 245 days per year), M is the annual profit and tax level of the enterprise, N is the average number of employees in the previous year, d is the number of working days (calculated as 300 days per year) in the previous year, L is the daily net income of employees, F is the cost of human capital input (adjusted according to the level of education), and P is the mental loss fee.

Cheng Qizhi et al. (2011) conducted a study from the perspective of safety regulation [21]. He believes that the value of a person’s life should be equal to the total value created during the remaining working years of the evaluation object, not equal to the value created by a person’s lifetime. The resulting measurement model is as follows:

$${\mathrm{V}}_{\mathrm{j},\mathsf{\alpha }}=\sum _{\mathrm{x}=\mathsf{\alpha }}^{\mathrm{b}}\frac{{\mathrm{Y}}_{\mathrm{j}}(1-{\mathrm{W}}_{\mathrm{x}}){\mathrm{P}}_{\mathsf{\alpha }}^{\mathsf{\beta }}{(1+\mathrm{g})}^{\mathsf{\beta }-\mathsf{\alpha }}}{{(1+\mathrm{r})}^{\mathsf{\beta }-\mathsf{\alpha }}}$$

where V_j,α is the life assessment value of the individual at the age of α in j field, Y_j is the average production value of individuals in field j in the assessment base year, W_x is the expected social unemployment rate of the individual at the age of X, ${\mathrm{P}}_{\mathsf{\alpha }}^{\mathsf{\beta }}$ is the probability of the individual surviving from the age of α to the age of β, g is the expected growth rate of the average production value of the individual, r is the discount rate, and b is the expected retirement age.

It is known from the above two types of life measurement models that when the human capital method is applied to assess the value of life, the consideration of utility value depends too much on the overall or individual income level, and there are different understandings of the value of life from different research perspectives.

Nowadays, the human capital method is adopted in the calculation of death compensation in China; i.e., the compensation standard is determined on the basis of the income level of the casualties. The industrial death compensation standard is taken as an example to illustrate. The calculation formula of the death compensation according to Regulation on Industrial Injury Insurance is as follows: death compensation amount = death compensation fee + living expenses of dependents + spiritual loss fee + others, whereas death compensation fee = urban/rural per capita disposable income of the previous year × N (age ≤ 60, N = 20; 60 < age < 75, for every one year increase in age, one year will be deducted from 20; 75 ≤ age, N = 5). The death compensation fee and the living expenses of the dependents are roughly equivalent to the income that the individual fails to generate for himself or herself and his or her family, i.e., self-worth. The spiritual loss fee is a kind of compensation for the spiritual pain caused for the relatives of the deceased, and this kind of compensation reflects the social value of the individual.

In short, in industrial death compensation, the assessment of individual life value based on the human capital method comprehensively considers the individual’s self-worth and social value. However, this compensation standard ignores the heterogeneity of income among individuals and approximately uses the average income level in the local area to represent the individual’s life value. Therefore, it can only assess the average life value in the local area, and it cannot accurately reflect the real assessment value of an individual.

4. Willingness-to-Pay Method

The willingness-to-pay method can be traced back to the paper published by Thomas Schelling in 1968 [24], which holds that the value of life depends on the consumption choice of the decision maker and is essentially a trade-off between risk control and consumption choice. The research methods can be roughly divided into two categories: one is stated preference (SP); the other is revealed preference (RP).

4.1. Stated Preference (SP)

The stated preference method is generally carried out through questionnaires, and the evaluation objects directly state their willingness to pay (WTP) or willingness to accept (WTA) when the risk of death changes, so as to calculate the life assessment value of the study population. Xi Yu et al. (2014) focused on exploring the effects of age and income on VSL and elaborated on the relationship between the value of life and death compensation standards. The results show that VSL reflects the WTP or WTA when the risk changes, which only represents a probability [25].

When assessing the value of life, the most typical research method in the stated preference method is the contingent valuation method (CVM). CVM was originally proposed by Davis [26] in 1963, and it was mainly used in the evaluation of the economic value of natural resources in the early days [27,28] and was later introduced into the field of life value assessment. Hua Wang et al. (2014) employed the contingent valuation method to estimate the upper and lower limits of China’s VSL based on cancer incidence rate and mortality risk statistics of different regions, ages, and genders [29]. Dan Cai et al. (2021) estimated the cost-effective threshold (CET) of quality-adjusted life years in China through statistical life value [30]. CVM is also used to evaluate the mortality rate of air pollution (B. Desaigues et al., 2011) [31].

When the contingent valuation method is used to assess the life value of the study group, the core problem is that of determining how to design the format of the questionnaire. Luo Junpeng (2008) pointed out that in the process of life value assessment by contingent valuation method, in order to make the assessment process more operational and the results more accurate, the format of the questionnaire is constantly being improved and perfected [32], and its evolution process is shown in Figure 1.

The questionnaires used in the early research on life value assessment were mainly open-ended questionnaires. Open-ended questionnaires generally did not have strict structural arrangements, and respondents could freely state their preferences. Researchers were often able to collect a wide range of information, but it is difficult to standardize the content, which increases the difficulty of quantitative and statistical analysis. The bidding card questionnaire is mostly used to investigate the willingness to pay of the study population. Generally, respondents need to choose among a variety of expenditures in different ranges to avoid a certain risk of death. One example of a question in a bidding card questionnaire is as follows: “Assuming that the probability of people dying on a road section is 3/10,000, a certain type of equipment can reduce the death probability by 2/10,000, nevertheless, the equipment can only be used for one year. If you must pass through this road section every day, how much Yuan are you willing to spend on purchasing this equipment?” The question is followed by a variety of expenditures in different ranges for respondents to choose [32].

In order to facilitate statistical analysis of the collected information, the questionnaire format began to gradually develop towards a closed questionnaire. Currently, the dichotomous questionnaire is the main method for life value assessment in closed questionnaires. Cai Chunguang et al. (2007) pointed out that a dichotomous questionnaire can be used to calculate the willingness to pay or the willingness to accept of the respondents by establishing a functional relationship between the probability of the respondent’s response to the outcome and the value of payment or compensation [33]. The double-boundary dichotomous and multi-boundary dichotomous questionnaires are based on the single-boundary dichotomous questionnaire, which is a process of adjusting the value of payment or compensation based on the results selected by the respondents. For example, when the respondent has a positive attitude towards the initial payment value given in the questionnaire, the payment value is appropriately increased, and when the respondent needs to choose a new payment value, both positive and negative results may appear at this time, and this is the double-boundary dichotomous questionnaire. An example of a question in a single-boundary dichotomous questionnaire is as follows: “Assuming that the probability of people dying on a road section is 3/10,000, a certain type of equipment can reduce the death probability by 2/10,000, nevertheless, the equipment can only be used for one year. If you must pass through this road section every day, are you willing to spend X Yuan to purchase this equipment?” The question is followed by two choices: a. Yes, b. No [32]. The double-boundary question is a continuation of the above single-boundary question; additional questions may be raised according to the respondents’ answers to the above question. If the answer is a, then increase the bidding value; if the answer is b, then decrease the bidding value [32]. The multi-boundary dichotomous questionnaire continues to expand on this principle. Theoretically, the more times the value of payment or compensation is adjusted, the more accurately the respondents’ willingness to pay or willingness to accept is obtained by subsequent measurement methods. However, based on the principles of operability and indirectness of research, the double-boundary dichotomous questionnaire is mostly used to conduct research on the theory of life value [34,35,36].

4.2. Revealed Preference (RP)

The revealed preference method generally estimates the value of life by examining people’s actual choices. The most important research method is the wage risk approach, which assesses the value of life based on the trade-off between wage and risk in the existing labor market. For example, the annual death risk of the financial industry is 0.1%, and the average annual salary of the industry is CNY 30,000. Assuming that financial practitioners fully understand the wage and risk of the industry, then the existing financial industry is the result of the free choice of practitioners. Based on the wage risk model, the average life value of employees in this industry can be estimated as CNY 30 million.

Agamoni Majumder et al. (2020) collected an information sample of 430 blue-collar workers in India to investigate the impact of workers’ compensation on their wages and mortality [37]. Mei Qiang et al. (2012) believe that the major advantages of the wage risk approach are that it is relatively simple to acquire data on the wage level and risk level of a specific industry and the research scenario is a real market, not a virtual one [38]. In the real market, differences in occupational risk are not the only factor that contributes to the differences in wage level. Adam Smith mentioned in The Wealth of Nations that there are two reasons for the disparity in wages: one is the nature of labor itself, including the working environment and difficulty of work; the other is social factors, such as the social recognition of occupations [39]. In actual research, it is often necessary to collect a large amount of data on such wage-related elements as the nature of labor and social factors and use them as control variables. The method of multiple regression analysis is then employed to examine the relationship between wage and death risk. The economic significance of the regression coefficient of death risk is the wage compensation amount required for each increase of one unit of death risk with other variables unchanged, and the regression coefficient can be approximately expressed as the life assessment value. Based on the above analysis, an econometric model can be established as follows:

$$\mathrm{W}={\mathsf{\beta }}_0+{\mathsf{\beta }}_1{\mathrm{L}}_{\mathrm{i}}+{\mathsf{\beta }}_2{\mathrm{S}}_{\mathrm{i}}+{\mathsf{\beta }}_3{\mathrm{R}}_{\mathrm{i}}+{\mathsf{\mu }}_{\mathrm{i}}$$

In the formula, W is the wage amount, L_i is the factor related to the nature of labor, S_i is the social factor, R_i is the death risk, β₀ is the constant term, β₁ and β₂ are the regression coefficients, β₃ is the life assessment value, and μ_i is the random disturbance term.

In practical applications, there are differences in the choice of regression models. Currently, linear regression models and semi-logarithmic regression models are more often used. The choice of the regression model is mainly based on the actual characteristics of the sample to ensure the accuracy of the results. Qin Xuezheng et al. (2010) used a semi-logarithmic regression model to assess the life value of groups in different regions of China, and they obtained the life value of the overall population, urban and rural populations, and different groups in the eastern, central, and western regions of China [40], which also reflects the computational convenience of this method to some extent.

5. Discussion

5.1. Improvement of Human Capital Method

Based on the summarization of a large number of studies, this paper proposes an improved method for assessing the value of life by the human capital method. The value of human life largely consists of three parts. The first part is the human capital investment in the early stage of the individual, the second is the utility value created by the individual for himself or herself, his or her family, the enterprise, and the society, and the third is the individual’s spiritual value.

Human capital investment is the investment made by individuals in life, education, training, etc., in order to maintain life function and improve work efficiency. This part of the investment needs to be converted into the life value of the individual, which is as follows:

$${\mathrm{V}}_1={\mathrm{V}}_{11}+{\mathrm{V}}_{12}+\dots +{\mathrm{V}}_{1\mathrm{n}}$$

where V₁ is the human capital investment and V₁₁, V₁₂, …, V_1n are the various expenses generated by the human capital investment.

According to Wang Liang (2004) [18], utility value can be interpreted as the wealth created by the individual for himself or herself, his or her family, the enterprise, and the country, but an individual’s utility value cannot simply be equated with his or her wage level. Karl Marx pointed out in his book Capital that in the process of labor production, in addition to the labor remuneration received, there is a part of the value occupied by the enterprise for free, which is called surplus value. Apart from the explicit labor remuneration and exploited surplus value, there is also the aforementioned “hidden labor” without pay. Therefore, utility value may approximately comprise the following four parts, as shown in

Table 2. Conversion and calculation of utility value.

Utility Value—V2	Conversion Form	Calculation Formula
After-Tax Labor Remuneration—${\mathrm{V}}_{21}$	Own and Family Income	${\mathrm{V}}_{21}$ = Labor Remuneration before Tax − Personal Income Tax
Average Surplus Value—${\mathrm{V}}_{22}$	Business Growth	${\mathrm{V}}_{22}$ = (Net Profit after Tax − Total Cost of Capital)/Total Headcount
Various Taxes—${\mathrm{V}}_{23}$	State Fiscal Revenue	${\mathrm{V}}_{23}$ = Personal Income Tax + Other Taxes
Hidden Labor—${\mathrm{V}}_{24}$	Service, Experience	${\mathrm{V}}_{24}$ = Average Salary Level of the Labor Practitioners

.

The components of life value also include spiritual value. In the law, a mental loss fee is often used to compensate the victims or their families for their mental pain and trauma. However, as this also contains punitive attributes, it is difficult to make accurate measurements. Yang Zongkang (2010) believes that spiritual value can be approximated by the size of the spiritual loss caused for the family and society after the death of the individual, and its size should be dependent on the value created by the individual for himself or herself [41], and proposes the calculation formula of adult spiritual value V₃:

$${\mathrm{V}}_3=0.1·\left(1-\frac{\left|35-\mathrm{i}\right|}{73}\right)·\frac{{\mathrm{w}}_{\mathrm{i}}}{{\mathrm{W}}_{\mathrm{i}}}·{\mathrm{V}}_{21}$$

where i is the age of the evaluation object, w_i is the annual income level of the evaluation object at the age of i, and W_i is the annual income level of the family when the evaluation object is at the age of i.

The size of spiritual value not only is dependent on the utility value V₂ created by the individual, but also is affected by the previous human capital investment V₁. Moreover, there is a part of spiritual value that exists independently of the utility value and human capital investment, and its size depends on the individual’s moral level M, i.e., the moral level of the deceased before his or her death will affect the degree of spiritual loss brought to the outside world after his or her death. It is generally believed that the higher the moral level of the deceased, the greater the mental loss caused for the outside world. In summary, the spiritual value of the individual comprises two parts. The first part of spiritual value is a function of human capital investment V₁ and utility value V₂, and the second part of spiritual value is a function of the individual moral level. The calculation formula is as follows:

$${\mathrm{V}}_3={\mathrm{f}}_1\left({{\mathrm{V}}_1,\mathrm{V}}_2\right)+{\mathrm{f}}_2\left(\mathrm{M}\right)$$

In assessing the value of life, incorporating the individual moral level into the measurement model can not only further enrich the connotation of the value of life, but also contribute to the development of life value education in emerging markets, which will in turn promote social harmony and achieve sustainable development. However, in actual operation, the individual moral level is difficult to quantify. Furthermore, the concept of morality is so broad that it is difficult to establish a perfect index system. Here another improvement idea is proposed for reference. For instance, the credit information system, including the basic database of personal credit information of the People’s Bank of China, is constantly being updated. As of 2015, the database contains a total of 870 million natural persons, of which 370 million have credit records. When measuring an individual moral level, his or her credit record can be cited as a reference, and it can be further incorporated into the moral index system in the form of scores.

5.2. Improvement of Wage Risk Approach

When the wage risk approach is utilized to assess the value of life, a multiple linear regression model is often established. As mentioned above, the relationship between wage and death risk in reality is not necessarily linear, which may lead to poor fitting of the econometric model. Alternatively, the artificial neural network model may be applied to life value assessment. When the indicators that affect the assessment of life value are determined, a functional relationship can be established as follows:

$$\mathrm{V}=\mathrm{f}(\mathrm{W},\mathrm{R},\mathrm{L},\mathrm{S})$$

where V is the life assessment value, W is the wage level, R is the death risk, L is the nature of labor, and S is the social factor.

In theory, a neural network with one input layer, one hidden layer with sigmoid activation function, and one output layer can approximate all continuous functions with arbitrary precision. Increasing the number of hidden layers can improve the nonlinear mapping ability of the network and reduce the error, but it will also complicate the training process and prolong the training time. A three-layer BP neural network model with one hidden layer is built to briefly explain the improved method. The selection of the number of neurons in the hidden layer needs to take into account the problems of both fitting accuracy and over-fitting. In actual operation, the number of neurons in the hidden layer is usually judged empirically. The empirical formula is as follows:

$$\mathrm{H}=\sqrt{\mathrm{I}+\mathrm{O}}+\mathrm{C}$$

where H is the number of neurons in the hidden layer; I is the number of neurons in the input layer; O is the number of neurons in the output layer; and C is an empirical constant, generally between 1 and 10. The neural network structure is constructed as shown in Figure 2.

After the neural network structure is constructed, it is necessary to select a real example of life value assessment as a training sample. The selection of the training sample needs to meet the following requirements: first, the training sample must be from the same or similar fields of work; second, the econometric fitting effect of the training sample must be good enough; third, the life assessment values in the training sample must be calculated by the same model. After the model is successfully trained, the model may be tested by using a part of the sample. If it meets the established accuracy requirements, it can pass the test; if it does not, the sample needs to be repeatedly trained and tested until the expected accuracy requirements are met. After the training and testing are completed, the wage level W, death risk R, the nature of labor L, social factor S, and other indicators of the evaluation object are input into the model, and the life assessment value can thus be obtained.

In summary, the contributions to the improvement of both the human capital method and wage risk approach may be used by such organizations as enterprises and people’s courts in resolving practical issues related to life value assessment. One example is that in practical divorce actions, the contribution of housewives to their families, which was often neglected, is now calculated by converting the long-term labor service of housewives into monetary terms using the average wage level of the local home service industry. Another example is that in industrial death compensation calculation (death compensation amount = death compensation fee + living expenses of dependents + spiritual loss fee + others), it is often difficult to determine the spiritual loss fee. A practical solution is to substitute an individual spiritual loss fee with his or her spiritual value, which mainly consists of his or her human capital investment and the utility value created by him or her.

As human capital is a source of competitive advantage in economic development in China as well as other emerging markets, hopefully, the improvement of the two life value assessment models will motivate not only enterprises to conduct occupational safety training, increase expenditure on occupational safety insurance, and reduce occupational safety risks, but also governments of both China and other emerging countries to facilitate the compensation policymaking for industrial injuries or deaths for the sustainable development of emerging countries.

6. Conclusions

Based on the review of life value assessment methods from both the historical and modern perspectives, limitations and possible future research directions are summarized below.

When the human capital method is applied to assess the value of life, the income of the evaluation object is often taken as the key indicator to represent his or her utility value. Thus, the calculated life assessment value, to a large extent, is dependent on an individual’s wage level, implying that “people with low wage levels have low life value”, which is obviously unreasonable. For example, although housewives do not have a fixed source of income, long-term labor services in the family should also be regarded as part of their utility value. In the existing literature, the utility value generated by such “hidden labor” is relatively ignored, which should be incorporated into the measurement model in future research.

When the wage risk approach is applied to evaluate the value of life, it is done by examining the willingness to pay or willingness to accept of the evaluation object from a single risk dimension. However, in real life, with the change in death risk, people’s willingness to pay or willingness to accept does not necessarily change linearly. For instance, a person’s willingness to accept at 5% death risk is CNY 10,000, but this is not necessarily equivalent to his or her willingness to accept of CNY 20,000 at 10% death risk. Therefore, the life assessment value calculated based on the wage risk model may only be applicable to a specific risk level. In future research, the willingness to pay or willingness to accept of employees in a certain industry under different risk levels may be investigated, the overall risk and willingness-to-accept curve of employees in the industry may be mapped, and an in-depth analysis of the curve may be conducted. Meanwhile, the assessment results obtained by other methods can also be placed in the risk and willingness-to-accept curve for comparison, and the corresponding risk levels can be observed under the curve.

As theories and methods of life value assessment originated in developed countries, research and application of these theories and methods in developing countries including China are relatively lagging behind. For instance, there is still room for improvement in the current death compensation mechanism, and in practice, the idea of a market approach in the field of asset appraisal may be employed. First, estimate the amount of industrial death compensation according to the current domestic laws and regulations; second, take the ratio of per capita GNP between the reference country and the domestic market as the proportional coefficient K; finally, multiply the estimated amount of domestic industrial death compensation by the proportional coefficient K, and compare the result with the actual compensation amount of similar cases in the reference country. This can serve as a reference for industrial death compensation in the domestic market.

Finally, it should be pointed out that the improvement ideas proposed in this paper are theoretical models, and their rationality and operability still need further analysis and more empirical evidence.