Putting a price on pain: The monetary compensation needed to offset welfare losses due to violence

Efficiency calculations of violence prevention are likely to be severely biased if the hard-to-measure value of utility reductions due to victimization is not included. We measure the monetary compensation needed to offset the welfare loss associated with being subjected to violence, by applying the compensating-income-variation method to data from an Icelandic health-and-lifestyle survey carried out in 2017. We examine differences in the monetary compensation needed by (i) types of violence, (ii) duration since the exposure, and (iii) the relationship with the perpetrator. Our results show that the average compensation needed to offset the welfare loss due to psychological violence is $43,750 per year, $22,202 per year for sexual violence, and $10,938 per year for physical violence. Further, we find that the monetary compensation needed is highest when the perpetrator is a spouse or an ex-spouse, and when the violence happened recently.