Scandinavian Working Papers in Economics

Karlstad University Working Papers in Economics,
Karlstad University, Department of Economics

No 5: Cost-Benefit Analyses of Sprinklers in Nursing Homes for Elderly

Henrik Jaldell ()
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Henrik Jaldell: Dept. of Economics, Postal: Dept of Economics, Karlstad University, Universitetsgatan 1, SE 651 88 Karlstad, Sweden

Abstract: The risk of dying in fires in nursing homes is six times the risk of dying in fires at home in Sweden. The risk of being injured in nursing homes is even higher. The reason is that fire alarms do not help if people have problems moving around, or have dementia and do not understand what is going on. One way to reduce this risk is to install fire sprinklers. The benefits depend on the value we put on elderly people living in nursing homes. Their life expectancy is 3.2 years. This study measures the benefits and compares them in terms of the monetary value of full lives, life years and quality adjusted life years (QALYs) for deaths and injuries. The results show that sprinklers are cost-effective in newly built nursing homes no matter what value of life is used. However, if sprinklers are installed in already existing buildings, they are cost-effective only if the value of a statistical life is used.

Keywords: QALY; value of statistical life; nursing home; fire safety; sprinklers; elderly

JEL-codes: H75; I11; J14; K32

37 pages, June 4, 2012

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