Keith Vodden Dr. Douglas Smith - Transports Canada

Appendix C—The Value of Human Consequences using Discounted Future Earnings
E = the Ontario probability of employment given participation, from
Labour Force Historical Review, 2005, Statistics Canada
71F0004XCB.
Y = the average Ontario earnings if employed, from Statistics Canada
(CANSIM).
The data on labour force participation and probability of employment
were available by sex in five-year groups for five-year age groups
from 15-19 to 65-69 and for 70 and over. We further subdivided the
last group by five-year increments by prorating the pattern Miller
reported in 1993. Similarly, earnings data were available for only
certain age groupings (15-19, 20-24, 25-34, 35-44, 45-54, 55-64, and
65 and over). Again, we prorated the observed statistics over the
required five-year age groups using the earnings pattern reported by
Miller.
• Annual household production was calculated as the product of average
employment income per person in Ontario and the ratio of Annual Household
Production to Annual Earnings in Miller’s data from 1993, in each five-year
age group. The validity of this calculation requires an assumption that this
ratio has not changed since then.
• Survival probabilities (of being alive a year later given one is alive at a
particular year of age), from Life Tables, Canada Provinces and Territories,
1995-1997, Statistics Canada 84-537-XIE.
• Fringe benefits were assumed, as was the case in Miller’s work, to equal
34.1% of wages based on data from Employee Benefit Cost in Canada, 1991,
KPMG Peat Marwick Stevenson & Kellogg.
E. SUMMARY OF DFE LOSSES
The exhibit shows losses as discounted future earnings at a real discount rate of
4%, the rate chosen by Miller et al. (Ted Miller, Brooke Whiting, Brenda Kragh, and
Charles Zegeer, “Sensitivity of Resource Allocation Models to Discount Rate and
Unreported Accidents,” Transportation Research Record 1124, pp. 58-65, 1987). Totals
are based on unadjusted data from ORSAR as we do not know the characteristics needed
for the DFE calculations of the adjusted injury and fatality data. More significant are the
average costs which are used in the social cost model. Other discount rates can be easily
applied using the spreadsheet.
TNS Canadian Facts, Social and Policy Research 171