Improvement On The Cost Of Risk Regulation Model LQI And Case Study

Nowadays, our society is a typically risky society with all kinds of risk in our lives. It is a balanced option between risk and cost when the government considers adopting what kind of social cost to achieve the reduction of social risk and keeping risk at a acceptable level. Most importantly, it is the key to reasonably measure and estimate the MRS(Marginal Rate of Substitution) of risk-cost. LQI(Life Quality Index) in this article is exactly a risk-regulation indicator, representing the level of social benefits. LQI can be used to measure and estimate optimal MRS of risk-cost.Based on LQI model of Lind, this paper adopts mathematical modeling methods and its main works cover two aspects:Firstly, loosing original hypothesis, the thesis discusses the effects of government regulation on life quality.Secondly, Using per capita GDP, life expectancy, ratio of leisure time and total time as well as other data, this paper calculates payable social costs to save a individual life and examines risk-regulation cost of death rate of pregnant and maternal women caused by sanitation problems.Main conclusions include:Firstly, adequate public good could increase life quality as well as social welfare.Secondly, there is a difference between social optimal security costs and actual fiscal payment by the model of LQI, which states the recognition of government on life quality.