B . 9 Breakeven analysis B . 9.1 Assessing the avoided costs of silicosis and silica-related disease
The economic impact associated with a worker developing silicosis or a silica-related disease would occur across many years , from the time the disease is diagnosed through to the end of the worker ’ s life . In most cases , silicosis and silica-related diseases will worsen over time .
Avoided health costs are typically estimated through the quantification of value of lives saved and illness avoided . This is an accepted economic method for analysing and comparing policy options for reducing fatalities and illness . The following section outlines the key concepts underpinning this analysis .
B . 9.2 Value of lives saved and illness avoided
The value of lives saved and illness avoided is estimated by comparing the duration an individual life with silicosis or silica-related disease and the number of years lost due to premature death before the average life expectancy . These concepts are outlined below .
B . 9.2.1 Value of a statistical life
A key concept used to measure the value of lives saved is the value of a statistical life which is an estimate of the value society places on reducing the risk of dying . The value of a statistical life is most appropriately measured by estimating how much society is willing to pay to reduce the risk of death . Based on empirical domestic and international research , Office of Impact Analysis ( OIA ) guidance indicates that the value of a statistical life is $ 5.3 million in 2022 dollars and the value of a statistical life year is $ 227,000 ( Office of Impact Analysis , 2023 ).
B . 9.2.2 Value of a disability adjusted life year ( DALY )
Regulatory and non-regulatory changes can have the benefit of reducing the risk of injury , disease or disability . A method to value these benefits is to adjust the value of statistical life year ( which could be interpreted as the value of a year of life free of injury , disease and disability ) by a factor that accounts for the type of injury , disease or disability .
The value of an individual living with the disease is measured using a disability adjusted life year ( DALY ) factor , representing the loss of one year of full health . Using the disability weighting for chronic obstructive lung disease ( 0.43 ) provided by the Australian Institute of Health and Welfare , the value of a DALY is $ 96,462 per annum ( Office of Impact Analysis 2023 ).
Key assumptions used in the Victorian Occupational Health and Safety Amendment ( Crystalline Silica ) Regulations 2021 Regulatory Impact Statement commissioned by WorkSafe Victoria ( Deloitte 2021 ) have been used to estimate average value of life saved and illness avoided per person as presented below .
B . 9.3 Average value of life saved The average value of life saved is calculated in three steps as presented below .
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