Article

Racial Differences in Labor Market Values of a Statistical Life

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Abstract

This article constructs measures of job fatality rates for black and white workers using information on job-related fatalities from 1992-1997. The fatality rates for black employees are somewhat greater than those for whites. Each of these groups receives significant compensating wage differentials for fatality risks, controlling for nonfatal risks and expected workers' compensation benefits. The implicit value of a statistical life is lower for black workers than for whites. These results in conjunction with evidence that blacks receive less annual compensation for fatality risks than do whites imply that black and white workers face different market offer curves that are flatter for blacks than for whites. Copyright 2003 by Kluwer Academic Publishers

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... Following Viscusi (2003Viscusi ( , 2007 and 2013), we use US data and merge the Census of Fatal Occupational Injuries (CFOI) by occupation and industry to the 2017 Current Population Survey (CPS). This allows us to have access to data on hourly wages, workers' characteristics and the rate of fatal injuries in their job. ...
... In this paper, we follow the recent work by Viscusi (2003Viscusi ( , 2007 To further compare our dataset with the literature, we run a hedonic (log)wage regression including the traditional controls (gender, years of schooling, age, age squared, ethnic group, marital status, union 8 We use crosswalks provided by the BLS to perform the aggregation to major occupations and industry. 9 The BLS advises to use March files of the CPS for computations of total employment. ...
... In the CFOI data, a fatal injury is an injury leading to death within one year of the day of the accident. SeeViscusi (2003) for more details about the CFOI data and its use in the present context. ...
Preprint
This paper introduces a maximum likelihood estimator of the value of job amenities and labor productivity in a single matching market based on the observation of equilibrium matches and wages. The estimation procedure simultaneously fits both the matching patterns and the wage curve. While our estimator is suited for a wide range of assignment problems, we provide an application to the estimation of the Value of a Statistical Life using compensating wage differentials for the risk of fatal injury on the job. Using US data for 2017, we estimate the Value of Statistical Life at \$ 6.3 million (\$2017).
... Following Viscusi (2003Viscusi ( , 2007, and (2013), we use US data and merge the Census of Fatal Occupational Injuries (CFOI) by occupation and industry to the 2017 Current Population Survey (CPS). This allows us to have access to data on hourly wages, workers' characteristics, and the rate of fatal injuries in their job. ...
... In this paper, we follow the recent work by Viscusi (2003Viscusi ( , 2007, and (2013) and construct measures of fatality rates by occupation-industry cells for the period 2012-2016. Unfortunately, data on fatal injuries by occupation within industries are not readily available. ...
... 7 In the CFOI data, a fatal injury is an injury leading to death within one year of the day of the accident. See Viscusi (2003) for more details about the CFOI data and its use in the present context. 8 We use crosswalks provided by the BLS to perform the aggregation to major occupations and industry. ...
Article
Full-text available
This paper introduces a maximum likelihood estimator of the value of job amenities and labor productivity in a single matching market based on the observation of equilibrium matches and wages. The estimation procedure simultaneously fits both the matching patterns and the wage curve. While our estimator is suited for a wide range of assignment problems, we provide an application to the estimation of the Value of a Statistical Life using compensating wage differentials for the risk of fatal injury on the job. Using US data for 2017, we estimate the Value of Statistical Life at $6.3 million ($2017).
... Following Viscusi (2003Viscusi ( , 2007 and 2013), we use US data and merge the Census of Fatal Occupational Injuries (CFOI) by occupation and industry to the 2017 Current Population Survey (CPS). This allows us to have access to data on hourly wages, workers' characteristics and the rate of fatal injuries in their job. ...
... In this paper, we follow the recent work by Viscusi (2003Viscusi ( , 2007 To further compare our dataset with the literature, we run a hedonic (log)wage regression including the traditional controls (gender, years of schooling, age, age squared, ethnic group, marital status, union 8 We use crosswalks provided by the BLS to perform the aggregation to major occupations and industry. 9 The BLS advises to use March files of the CPS for computations of total employment. ...
... In the CFOI data, a fatal injury is an injury leading to death within one year of the day of the accident. SeeViscusi (2003) for more details about the CFOI data and its use in the present context. ...
... Value of Statistical Life (VSL) is a concept which was born out of political interest but later started serving as a policy instrument. Viscusi (2003) in his grand compilation of over 100 studies has broadly discussed the issues, methods and controversies related to VSL. This paper is an extension to his work in the sense that it intends to compile more literature on VSL from 2003 till 2015. ...
... People engage in various market decisions in their daily lives which reveal their implicit trade-off between risk and money. For economists, these market choices act as a key instrument to develop the estimates of Value of Statistical Life (VSL) (Viscusi, 2003). VSL measures the risk-money trade-off for tiny amount of fatal risks (Viscusi, 2011). ...
... However, it should be kept in mind that the estimated wage-risk trade-off locus w (p) does not indicate how a worker must be compensated for non-marginal or large variation in risk. In such a case, worker's wage-risk trade-off will alter since the appropriate wage-risk tradeoff must be made along the worker's expected utility locus and not the estimated market wage-risk tradeoff (Viscusi, 2003). ...
... This issue of labor market segmentation also arises with respect to racial differences in compensation for risk. Viscusi (2003) analyzed the compensating differentials faced by black and white workers in the U.S. economy. While black workers faced greater risk than did whites, they received lower wage premiums for risk. ...
... The component VSL values are average estimates across each particular sample and consequently do not reflect the full range of heterogeneity within the sample. The meta-analysis estimates by Viscusi and Aldy (2003) ...
... This branch of the EPA based its update of the VSL amount on the results of two meta analyses – Mrozek and Taylor (2002) and Viscusi and Aldy (2003). 22 Based on its assessment of the implications of these analyses, the EPA Air Office lowered the VSL from $8 million to $7 million. ...
Article
Economic research has developed estimates of the heterogeneity of the value of statistical life (VSL) on dimensions such as individual age, income, immigrant status, and the nature of the risk exposure. This paper examines the empirical evidence on the heterogeneity of VSL and explores the potential implications for the valuation of regulatory policies. EPA unsuccessfully sought to adopt age variations in VSL based on survey evidence. However, labor market estimates of VSL indicate a pattern that tracks lifetime consumption trajectories, as the VSL rises with age and eventually tapers off but does not plummet with age. The VSL has an income elasticity of at least 0.5. The analysis of age variations in VSL is accompanied by a review of the value of statistical life year (VSLY) approach. The U.S. Department of Transportation recognizes the influence of a positive income elasticity of VSL, and EPA has proposed adopting a 50% cancer premium. Recent studies suggest that the risk of death from terrorist attacks are of particular concern and may merit a substantial premium in benefit assessments. Whether and how such heterogeneity in VSL should be incorporated in regulatory policy evaluations depends in part on the source of the heterogeneity. Some prominent sources of heterogeneity arise from segmented labor markets in which disadvantaged groups face different labor market opportunities. Blacks and Mexican immigrants face quite different labor market offer curves. As a result, influences that are problematic from the standpoint of setting different benefit levels for policy purposes are differences in VSL by race and immigrant status. The paper also examines the EPA’s recent devaluation of life and the Posner-Sunstein proposal to use VSL estimates to set hedonic damages in tort liability cases. The Posner-Sunstein proposal would lead to excessive levels of compensatory damages and would greatly increase damages amounts.
... The VSL literature usually estimates VSLs using measures of fatal and nonfatal risk. See Viscusi (1993), Dorman and Hagstrom (1998) and Viscusi and Aldy (2003) for a review of the existing literature and Mrozek and Taylor (1999) for the results of an often cited meta-analysis on the determinants of the value of life. Mrozek and Taylor (1999) offer a best practice estimate of VSL of $2million (1998 prices), for people facing risks around 1 in 10,000. ...
... However, once the occupational distribution of workers is accounted for they find there is no premium for males but they do find that men and women in bluecollar jobs earn a premium but that no premium exists for white-collar jobs. Viscusi (2003) also reveals, in a US study, that blacks do face a higher fatality risk and nonfatal injury-risk but that the differences are not that great. Viscusi (2003) also shows that black employees do receive significant premiums for nonfatal risks so it seems that there is evidence of constructive market performance on behalf of black employees. ...
... Viscusi (2003) also reveals, in a US study, that blacks do face a higher fatality risk and nonfatal injury-risk but that the differences are not that great. Viscusi (2003) also shows that black employees do receive significant premiums for nonfatal risks so it seems that there is evidence of constructive market performance on behalf of black employees. The problem, however, is that although black employees undertake greater risk than whites, they also receive lower annual pay. ...
Article
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Within a compensating wage differential framework we investigate whether there is a wage premium for working in a pollution intensive industry. Our results for the economy as a whole suggest a small wage premium of approximately one quarter of one percent associated with the risk of working in a dirty job. This premium rises to over fifteen percent for those individuals who work in one of the five dirtiest industries. We also find evidence of a fatal risk wage premium, providing estimates of the value of a statistical life of between £12 million and £19 million (2000 prices).
... Viscusi (2004) also finds that full sample results do not yield positive and statistically significant wage premia for fatality risks. Viscusi (2003) estimates a positive and significant CWD for Black employees, suggesting that the market has performed to their benefit, given that they face comparatively high nonfatal risk at work. However, their annual job risk compensation is lower than that for White workers, indicating differences in labour market opportunities, as well as the structure of offers for risky jobs, across White and Black workers. ...
... The value of injury by race and gender The term 'value of statistical life' was introduced by Thomas Schelling (1968) and is usually defined as an individual rate of trade-off between small changes in own mortality risk and own spending on other goods and services, within a defined time period. Useful introductions to the VSL literature are available in Blomquist (2015), Viscusi (2003), and Viscusi and Aldy (2003). Viscusi and Aldy (2003) state that, since nonfatal injuries are far more common than fatalities, and have a wide variation in severity and probability, estimates of the loss of quality of life, which includes both pain and suffering and reduced income, needs to include potential victims' willingness to pay (WTP) for personal safety. ...
Article
Full-text available
The compensating wage differential (CWD) for nonfatal injury and value of statistical life or injury in occupations have rarely been analysed separately by gender or race. This paper uses individual-level data from the 2012–2015 March Current Population Survey to estimate the CWD as well as the value of statistical injury (VOI) by race and gender. We find male workers command a positive risk premium, and this is higher when they are unionised. We also find a positive risk premium for White unionised workers and a slightly lower risk premium for White males. Like other investigators, we find that nonfatal risk is heterogenous, and its compensation is difficult to estimate using a standard wage equation, even with some smaller subsamples from our dataset that are gender- or race-specific. Our estimates of the VOI show us that male workers who are unionised have the highest VOI, followed by Hispanic union workers, and Black females. This last finding follows from Black females working in jobs that have the highest risk rates compared to White and Hispanic females.
... The prospects for arriving at such estimates are indicated in the work of some scholars. In the value of life literature, Viscusi (2003) observes that black workers receive significant compensating wage differentials for fatality risk, suggesting the possibility of wage differentials for discrimination risk as well. Only detailed study, however, can reveal whether this is so. ...
... 54 Critics of the value of life literature have suggested that the failure to converge to a uniform value of life estimate reflects a fundamental shortcoming of the hedonic wage methodology used to estimate the value of life. However, as Viscusi (2003) points out, "What these criticisms fail to recognize is that the implicit value of a statistical life is not a universal constant" (p. 239). ...
Research
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This paper examines whether economic analysis can help provide firmer foundations for the adjudication of human rights claims in establishing monetary awards for injury to dignity and, in accommodation cases, better capturing benefits for society. In relation to injury to dignity, it explores the prospects for establishing an objective evidentiary baseline through a program of independent economic research. In the area of accommodation, the paper considers if the wider use of Cost-Benefit Analysis could help prevent undervaluation of accommodation and whether governments should help cover the incremental cost of accommodation in some cases.
... Labour force of each country have different and unique characteristics which will be better accounted for if the VSL is estimated using data from the concerned country rather than using a VSL estimate that has been transferred from US. There are numerous studies by experts in US (Viscusi (2003), Viscusi and Aldy (2007), Aldy and Viscusi (2008), Hersch and Viscusi (2010), Viscusi (2011), etc.) on heterogeneity issues of VSL which indicates that VSL estimates vary by an individual's age, gender, race, immigrant status, etc. There are many studies (Viscusi and Hersch 2001, Viscusi 2003, 2011 on examining the existence of segmented labour markets which indicates that underprivileged group of workers face different labor market opportunities and therefore have different VSL estimates. ...
... There are numerous studies by experts in US (Viscusi (2003), Viscusi and Aldy (2007), Aldy and Viscusi (2008), Hersch and Viscusi (2010), Viscusi (2011), etc.) on heterogeneity issues of VSL which indicates that VSL estimates vary by an individual's age, gender, race, immigrant status, etc. There are many studies (Viscusi and Hersch 2001, Viscusi 2003, 2011 on examining the existence of segmented labour markets which indicates that underprivileged group of workers face different labor market opportunities and therefore have different VSL estimates. US have VSL estimates that vary by individual's age, cohort, gender, race, smoking status, migrant status, union status, etc. ...
Article
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This paper uses information on a sample of 430 blue collar workers from different manufacturing industries of Ahmedabad, India to examine the influence of worker’s compensation on their wage and mortality rates. This relation has a direct impact on the value of statistical life (VSL) estimates which is used to evaluate various health and safety policies. The compensation benefit plays a significant role in worker’s compensation package however it has not received much attention in previous Indian studies. Inclusion of the compensation variable not only raises the co-efficient of risk variables but also increases the value of statistical life and value of statistical injury (VSI) estimates. The result of this study indicates that trade-off between worker’s wage and compensation benefit exists for the workers in the sample. The estimated VSL that captures the effect of compensation benefit ranges between INR 30.27 million ($0.46 million) and INR 72.11 million ($1.10 million) while the estimated VSI ranges between INR 1.94 million ($0.029 million) and INR 2.82 million ($0.043 million). Besides, this paper goes further to study the rate of substitution between worker’s compensation benefit and their wage and finds that the benefit levels are sub-optimal.
... Differences in wage-risk tradeoffs by country of origin may arise from unequal economic circumstances or from differences in tastes. For instance, inequalities in lifetime levels of wealth -supposed to be lower for immigrants-may explain differences in willingness to bear risk, i.e. immigrants or ethnic minorities would be more likely to be employed in risky jobs (Viscusi, 2003;Lucas, 1974;Robinson, 1984). ...
... 5 of origin may arise from discrimination or from unmeasured productivity differences (Akhavan, 2006;Leeth and Ruser, 2006). In this respect, literature on market discrimination documents that immigrants are paid less for the same job (Viscusi, 2003). Other factors different from preferences may explain divergencies in risk levels between immigrants and non-immigrants if some hypotheses behind the hedonic equilibrium theory are unrealistic. ...
Article
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We analyze the impact of working and contractual conditions, particularly exposure to job risks, on the probability of acquiring a disability. We postulate a model in which this impact is mediated by the choice of occupation, with a level of risk associated to it. We assume this choice is endogenous, and that it depends on preferences and opportunities in the labour market, both of which may differ between immigrants and natives. To test this hypothesis we use data from the Continuous Sample of Working Lives of the Spanish SS system. It contains individual, job and firm information of over a million workers, including a representative sample of immigrants. We find that risk exposure increases the probability of permanent disability by 5.3%; temporary employment also influences health. Migrant status – with differences among regions of origin – significantly affects both disability and the probability of being employed in a risky occupation. Most groups of immigrants work in riskier jobs, but have lower probability of becoming disabled. Nevertheless, our theoretical hypothesis that disability and risk are jointly determined is not valid for immigrants: i.e. for them working conditions is not a matter of choice in terms of health.
... Applying the same approach as above, it is possible to identify other labor market groups that are exposed to relatively greater risk but receive less compensation for these risks than counterpart labor market groups. This segmented labor market phenomenon is consistent with the VSL evidence by race, as Black workers incur greater fatality risks than white workers but receive less compensation for these risks (Viscusi, 2003). The inadequate compensation that Black workers receive for fatal and nonfatal risks is also documented in the article by Leeth and Ruser (2003). ...
... On the contrary, the HWM estimates VSL while using the wage data of the labor market, which are often readily available, thereby resulting in a low operating cost. Thus, HWM is currently the dominant approach in estimating VSL, which has been extensively used [18][19][20][21][22][23][24][25][26][27][28][29]. ...
Article
Full-text available
According to theory and existing empirical results, heterogeneity in personal characteristics, with income variation being one of them, affects the marginal willingness to pay (WTP) for reducing fatal risk. In this study, the effect of income heterogeneity on the value of statistical life (VSL) in Taiwan through unconditional quantile regression analysis using the data collected by the "Manpower Utilization Survey" is investigated. The results of this empirical study show that the hedonic wage function that was constructed using empirical data from Taiwan was in line with the general form of non-linear function rather than the semi-log function that has been often used in previous studies, which should have great impact on the estimation of the VSL. The empirical results also show that the estimated VSL of Taiwanese labor varied with the difference in wages, which needs to be taken into account when discussing the public policies using VSL.
... Nonwhite women do not receive this premium. The disparity by race is consistent with a similar lack of compensation for nonwhites at risk of fatality or injury (Leeth and Ruser 2003;Viscusi 2003). Based on the estimated premium for the risk of sexual harassment, I calculate a measure analogous to the value of a statistical life (VSL), which I term the Bvalue of statistical harassment,^or VSH. ...
Article
Full-text available
Using data on sexual harassment charges filed with the Equal Employment Opportunity Commission, I calculate the risk of sexual harassment by gender, industry, and age and establish that white females, but not nonwhite females, receive a compensating wage differential for exposure to a higher risk of sexual harassment. I use this risk premium to calculate the value of statistical harassment (VSH) in a manner analogous to the calculation of the value of statistical life (VSL). The VSH is around $7.6 million, about three-quarters of the size of the most-commonly cited levels of the VSL, and far above the maximum damages award for sexual harassment available under federal law. Boosting the maximum damages award to equal the VSH would create the appropriate economic incentives for organizations to deter sexual harassment.
... Hsueh and Tienda (1996) find that Blacks and Hispanics have greater labor force instability than Whites. Viscusi (2003) shows that Blacks have a higher death risk than Whites. It is rational for people to be willing to take less financial risk if their jobs are less stable and/or they have a higher death risk. ...
... In the U.S., for example, the VSL for occupational risk was $7.17 million (Viscusi, 2003(Viscusi, , 2005. In 2016, however, the VSL has been revised to $9.6 million using a 2015 base year (Moran and Monje, 2016). ...
Article
Leaks of flammable gases from containing systems pose safety concerns in many industrial settings. In this research, state-of-the-art visual flowcharting methodology is employed to develop a probabilistic model to quantify occupational risks of fire and explosion events initiated by leaks that ignite within enclosed spaces. In this model, leak initiation time and leak type (small, medium, or large) are selected based on user-specified probability distribution function and leak probability ranges, respectively. Other inputs to the model include probability distribution of time to failure of mechanical ventilation in the enclosed space, likelihood of presence of an ignition source with energy ≥ minimum ignition energy (MIE) of formed flammable gas cloud, probability of leak detection prior to ignition, and conditional probabilities of fires and explosions, given ignition. The model checks whether randomly-selected times of leak initiation and ventilation failure are within user-specified mission time. Number of personnel present near leak source is determined by a user-selected probability distribution. Uncertainties of input probabilities are propagated through the model using Monte Carlo sampling technique. Given occurrence of an undetected gaseous leak in conjunction with presence of an ignition source, ventilation failure, and presence of personnel close to the hazard source, the model calculates frequencies of risks of fire or explosion injuries, averaged over 10⁶ Monte Carlo trials per simulation run. Functionality of proposed model is demonstrated by a hydrogen refueling station (HRS) case study in which gaseous hydrogen is postulated to leak from its compressor system. Base case and worst case scenarios as well as sensitivity cases are considered and their simulation results show that, for these postulated scenarios, compressor's small H2 leaks (unlike medium and large leaks) pose intolerable occupational risk frequencies that exceed the acceptable risk level of 1.0E-4/year as well as NFPA's selected risk guideline of 2.0E-5/year which is driven by the comparative risk to gasoline stations. To mitigate predicted occupational risks to acceptable levels, safety control measures and best practices are recommended. The proposed model can be used as a training tool for first responders to fire and explosion events initiated by leaks of flammable gases. The model allows user-specified ‘what-if’ scenarios with or without risk mitigation measures. In addition to HRS, the model can be applied to a broad range of industrial applications such as natural gas refueling stations, indoor chiller systems which employ flammable refrigerants, and warehouses equipped with hydrogen-powered forklifts. Risk insights from this model's simulations can also support safety codes & standards and root cause investigations of industrial fire and explosion events.
... In addition to income, characteristics that affect VSL include age, health status, education, risk characteristics, risk perception (Robinson 2008), race (Viscusi 2003), union (Viscusi and Aldy 2003), institutional structures (e.g., job markets and healthcare systems), and other factors (Hammitt and Robinson 2011). Regional differences in these population characteristics suggest differences in VSL across regions. ...
Article
Full-text available
The value of statistical life (VSL) is a measure of people’s willingness to trade off wealth for risk. With few exceptions, analysts apply uniform VSL estimates to consumer policy evaluations, regardless of the characteristics of the targeted population. Using the hedonic wage approach, this study examines regional differences in VSL in the USA, reflecting variations in wealth, demographics, and preferences across the states. Census division differences are discovered, with higher VSLs in richer divisions and lower VSLs in poorer divisions.
... In some cases, this procedure has involved averaging the results across studies based on a survey of the literature or a meta-analysis, while in others the agency has used the results of a meta-regression analysis to control for different variables that may affect the estimated VSL, such as the average income of the sample . Among the meta-regression analyses that have been relied upon by US government agencies in recent years are those by Mrozek and Taylor (2002), Viscusi and Aldy (2003), and Kochi, Hubbell, and Kramer (2006). Agencies also may refer to more than one metaregression analysis as the basis for its VSL estimate. ...
Article
Meta-regression estimates of the value of a statistical life (VSL) controlling for publication selection bias often yield bias-corrected estimates of VSL that are substantially below the mean VSL estimates. Labor market studies using the more recent Census of Fatal Occupational Injuries (CFOI) data are subject to less measurement error and also yield higher bias-corrected estimates than do studies based on earlier fatality rate measures. These results are borne out by the findings for a large sample of all VSL estimates based on labor market studies using CFOI data and for four meta-analysis data sets consisting of the authors' best estimates of VSL. The confidence intervals of the publication bias-corrected estimates of VSL based on the CFOI data include the values that are currently used by government agencies, which are in line with the most precisely estimated values in the literature.
... Several studies even found that non-union workers received no compensation or negative CWD for risks (for example, Viscusi, 1980 andDorsey, 1983). Viscusi (2003) looked at the racial differences in the labor market VSL. He ran the CWD regressions using separate samples of black and white workers. ...
... It assumes that an individual's willingness to pay for mortality risk reductions does not depend on his or her income or age or baseline mortality risk or the source of the mortality risk reduction or other dimensions of the individual's health status or any other factors that may plausibly affect his or her values. Numerous studies have examined the heterogeneity of willingness to pay for mortality risk reductions with respect to a wide range of individual-level and policy attributes (e.g., Eeckhoudt and Hammit 2001, Leeth and Ruser 2003, Viscusi 2003, Hammitt and Liu 2004, Itaoka et al. 2005, Alberini et al. 2006, Kniesner et al. 2006, Aldy and Viscusi 2008, Cameron et al. 2008, Evans and Smith 2008, Scotton and Taylor 2009, Alberini and Ščasný 2010. The results of these studies are themselves heterogeneous, but on the whole they suggest that a variety of individual-or policy-specific factors are correlated with people's willingness to pay for risk reductions. ...
Article
Full-text available
Government agencies routinely use the “value of a statistical life” (VSL) in benefit-cost analyses of proposed environmental and safety regulations. Here I review an alternative approach for valuing health risks using a “life-cycle consumption framework.” This framework is based on an explicit individual-level lifetime utility function over health and income at all ages, and so could be used to examine any pattern of health risk changes over a person’s lifespan. I discuss several potential advantages of this framework, both positive and normative. From a positive perspective, this framework can support a functional benefit transfer approach that is more flexible and potentially more accurate than the standard point-value benefit transfer approach based on the VSL, and it can be used to evaluate mortality and morbidity effects simultaneously in an internally consistent model. From a normative perspective, it provides a natural foundation for a social welfare function and therefore could facilitate a unified evaluation of efficiency and equity, as a supplement to traditional benefit-cost analysis.
... Nevertheless, wage-risk tradeoffs need not be equal. For instance, inequalities in lifetime levels of wealth e supposedly lower for immigrants e may explain differences in willingness to bear risk, i.e., immigrants or ethnic minorities would be more likely to accept and to be employed in high-risk jobs (Leeth & Ruser, 2006;Robinson, 1984;Viscusi, 2003). Immigrants and non-immigrants might also differ in terms of market opportunities. ...
... The value of a statistical life is a relevant concept in public administration decisions that directly impact the death rate in the population (e.g., changes in speed limits on public highways or modification of workplace security standards). Several researchers have investigated the question of how a statistical life can be evaluated (e.g., Costa and Kahn, 2004;Viscusi, 2003), but it would also be interesting to investigate how approaches applied within the area of customer lifetime valuation could be applied in that context (e.g., Berger and Nasr, 1998;Haenlein et al., 2006). Finally, we also encourage publications which investigate how research in the area of public administration could be transferred into the marketing discipline. ...
Article
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Summary Although the State and its permanent representation, public administration, account for nearly half of GDP in the European Union, there is a surprising decline in research dealing with this sector in the management and marketing literature over the last 10Â years. The objective of our manuscript is to show how theoretical perspectives, which have emerged in both marketing and public administration over the past few decades, have resulted in a visible and practically relevant convergence between these two disciplines that has previously only been discussed theoretically. We present the applications and limits of public marketing within this framework for the four classical marketing instruments (product development/improvement, price, promotion and place) to show that public marketing (i.e., the application of marketing concepts and tools to public administration) is already a reality in a wide variety of countries. Finally, we report the results of five qualitative in-depth interviews which we conducted with public administration agents from different sectors and countries. These interviews provide an empirical indication for our hypothesis that the historical evolution of the marketing discipline from a transaction- to a relationship-orientation as well as the trend towards "managerialism" in public administration, are likely to lead to an increasing importance of public marketing over the coming years.
... 16 Viscusi and Aldy (2003) and Aldy and Viscusi (2007) review the previous labor market studies of variations in VSL with risk levels, income, and age. 17 Viscusi and Hersch (2001) find that smokers and nonsmokers face different market offer curves, and Viscusi (2003) finds that the offer curves differ by race. Leeth and Ruser (2003) analyze differences in VSL by gender and race. ...
Article
The refinement in worker fatality risk data used in hedonic wage studies and evidence from new stated preference studies have facilitated the exploration of the heterogeneity of the value of statistical life (VSL). Although the median VSL estimate for workers is $7–$7–8 million, the VSL varies considerably within the worker population. New estimates of the income elasticity of VSL are 1.0 or above, which are consistent with theoretical models linking VSL to the coefficient of relative risk aversion. The specific relationship between VSL and risk aversion is, however, more complex than previously understood. Age differences in VSL are substantial, with young children being accorded especially high VSL amounts. The public’s willingness to pay to reduce risks is reduced if those being protected are perceived as being blameworthy due to their responsibility for contributing to the risk.
... This study followed standard best practices for EE studies based on the body of literature accumulated over the past two decades. As shown in Figure 1, these include explicit criteria for expert selection, use of a detailed written protocol, providing comprehensive briefing materials to experts in advance of the interview, elicitation of judgments in individual interviews, and convening experts prior to the elicitation (e.g., Cooke, 1991;Morgan et al., 1984 and2001;Evans et al., 1994;Walker et al., 2001 and2003;Roman et al., 2008). The motivation behind these practices is to help experts avoid some of the well-documented heuristics and biases that lead to poorly calibrated judgments (Kahneman et al., 1982). ...
Article
The monetized value of avoided premature mortality typically dominates the calculated benefits of air pollution regulations; therefore, characterization of the uncertainty surrounding these estimates is key to good policymaking. Formal expert judgment elicitation methods are one means of characterizing this uncertainty. They have been applied to characterize uncertainty in the mortality concentration-response function, but have yet to be used to characterize uncertainty in the economic values placed on avoided mortality. We report the findings of a pilot expert judgment study for Health Canada designed to elicit quantitative probabilistic judgments of uncertainties in Value-per-Statistical-Life (VSL) estimates for use in an air pollution context. The two-stage elicitation addressed uncertainties in both a base case VSL for a reduction in mortality risk from traumatic accidents and in benefits transfer-related adjustments to the base case for an air quality application (e.g., adjustments for age, income, and health status). Results for each expert were integrated to develop example quantitative probabilistic uncertainty distributions for VSL that could be incorporated into air quality models.
Article
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This article reviews the history of race laws in the United States as distinct from the rule of law, an idea found in the writing and speeches of Sadie Tanner Mossell Alexander, the first African American PhD in economics (1921). We review the race laws of slavery, lynching, Negro Jobs, and the making of the Black ghetto. We highlight the life and writings of Alexander and other early African American economists as an example of the cost of racial exclusion in the economics profession and how it has impeded the production of useful knowledge about the workings of the US economy. (JEL J15, K38, N31, N32, N41, N42)
Chapter
In ordinary language, “risk” is mainly used in conjunction with “chance”. In Chinese language, “risk” indeed has two characters, one for risk proper (sometimes called negative consequences) and the other for chance. In insurance economics, however, the word has a specific meaning to be defined in Sect. 2.1. Also, the statistical measurement of risk turns out to be an endeavor fraught with difficulties.
Article
The analysis of safety and health regulations often involves assigning a monetary value to the reduction of fatal risks to health. This is done based on how people are compensated for undertaking various risks. Compensating Wage Differential (CWD) for job risks is key when valuing fatality risks. The Value of Statistical Life (VSL) acts as the foundations when analysing the benefits of various risk reduction policies of the government. However, VSL estimates are observed to vary considerably across various studies. The source of this variability must be understood to guide present and future policy-making endeavours. This article presents a meta-analysis based on 34 observations from 30 VSL studies, which have used the hedonic wage method to estimate VSL. This meta-analysis suggests that the emerging areas, such as the effect of a worker’s age, compensation benefits and long-term, health-related job risks need to be explored further when estimating the VSL.
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Selection of the best estimates of economic parameters frequently relies on the “best estimates” or a meta-analysis of the “best set” of parameter estimates from the literature. Using an all-set dataset consisting of all reported estimates of the value of a statistical life (VSL) as well as a best-set sample of the best estimates from these studies, this article estimates statistically significant publication selection biases in each case. Biases are much greater for the best-set sample, as one might expect, given the subjective nature of the best-set selection process. For the all-set sample, the mean bias-corrected estimate of the VSL for the preferred specification is $8.1 million for the whole sample and $11.4 million based on the CFOI data, while for the best-set results, the whole sample value is $3.5 million, and the CFOI data estimate is $4.4 million. Previous estimates of huge publication selection biases in the VSL estimates are attributable to these studies’ reliance on best-set samples.
Article
Selection of the best estimates of economic parameters frequently relies on the best estimate or a meta-analysis of the “best-set” of parameter estimates from the literature. Using an all-set dataset consisting of all reported estimates of the value of a statistical life (VSL) as well as a best-set sample of the best estimates from these studies, this article estimates statistically significant publication selection biases in each case. Biases are much greater for the best-set sample, as one might expect, given the subjective nature of the best-set selection process. While “best estimate selection bias” potentially exacerbates the problems associated with existing publication selection biases, the mean and median best-set estimates of the VSL are similar to those in the all-set sample. The bias-corrected estimate of the VSL for the all-set USA sample is $9.5 million and $11.5 million based on the CFOI data.
Article
Notre societe fait face a de nombreux risques qui affectent des vies humaines. Les autorites publiques doivent donc determiner le budget optimal a consacrer a chaque projet visant a diminuer ces risques sociaux. L’analyse avantages-couts est un outil tres utilise pour l’evaluation de ces projets. La tâche du gouvernement est de mettre en place des projets ou des reglementations qui genereront des benefices superieurs aux couts de leur implantation. Les couts sont habituellement assez faciles a determiner, mais comment evaluer les benefices relies a la sauvegarde de vies humaines? Depuis les annees soixante-dix, le nombre d’etudes realisees sur la mesure de la valeur statistique d’une vie humaine (VSV) est impressionnant. Plusieurs valeurs ont ete estimees, et ce, a l’aide de differentes methodes. La difficulte des gouvernements a choisir une valeur provient de la grande variabilite dans les resultats obtenus. En effet, les VSV observees varient de 0,5 million de dollars jusqu’a 50 millions de dollars ($ US 2000). L’objectif principal de cet article est d’aider a comprendre d’ou vient cette grande variabilite dans les resultats. Nous voulons aussi determiner quelle valeur nous semble la plus raisonnable.
Chapter
This chapter reviews hedonic valuation issues. It begins in the general economics literature with a statement of what is being measured and provides three theoretical examples from leading authors. It then depicts market equilibrium and discusses empirical measurement strategies. Illustrations of what the value of life is not are discussed. Next, econometric issues causing a wide range of reported valuation results are discussed. Finally, attempts at forensic economics applications, within the context of wrongful death and personal injury litigation, are addressed. Because legal cases are treated in another chapter of this volume written by Ireland, and general acceptance for compensation purposes in forensic economics is discussed in a chapter written by Brookshire and Slesnick, these topics are excluded here. The chapter concludes with a lengthy references list.
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Policy applications of the value of a statistical life (VSL) often make a benefits transfer assumption that the VSL from one market context is broadly applicable to other contexts. The U.S. Department of Transportation’s estimate of $9.2 million is based on labor market estimates of VSL. This article examines whether there are any significant differences in labor market estimates of the VSL by the nature of the fatality, utilizing two different approaches that distinguish between fatalities resulting from transportation events and vehicle-related sources based on the Census of Fatal Occupational Injuries (CFOI) data. The labor market estimates of VSL generalize across transport and non-transport contexts so that it is appropriate to use labor market estimates of VSL to value the benefits of transport regulations. This result holds even after accounting for the level and composition of nonfatal job injuries.
Article
The value of mortality risk reductions, conventionally expressed as the value per statistical life, is an important determinant of the net benefits of many government policies. US regulators currently rely primarily on studies of fatal injuries, raising questions about whether different values might be appropriate for risks associated with fatal illnesses. Our review suggests that, despite the substantial expansion of the research base in recent years, few US studies of illness-related risks meet criteria for quality, and those that do yield similar values to studies of injury-related risks. Given this result, combining the findings of these few studies with the findings of the more robust literature on injury-related risks appears to provide a reasonable range of estimates for application in regulatory analysis. Our review yields estimates ranging from about $4.2 million to $13.7 million with a mid-point of $9.0 million (2013 dollars). Although the studies we identify differ from those that underlie the values currently used by Federal agencies, the resulting estimates are remarkably similar, suggesting that there is substantial consensus emerging on the values applicable to the general US population. Copyright © 2015 John Wiley & Sons, Ltd. Copyright © 2015 John Wiley & Sons, Ltd.
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When OSHA was established, proponents believed it would dramatically improve the safety and health of American workers. During the forty years of its existence, workplace fatalities and nonfatal injuries and illnesses have fallen but OSHA is not the major cause of this decline. Changes in the industrial mix of workers and improvements in safety technology have combined with expanded employer incentives unrelated to OSHA to decrease worker injuries and illnesses. The financial incentives for employers to expand expenditures on worker safety and health created by the labor market, states' workers' compensation insurance programs, and the legal system swamp the meager incentives created by OSHA. This survey examines OSHA in light of the other forces affecting workplace safety in the United States to generate a set of policy recommendations for how it can best use its limited resources to improve worker safety and health. No evidence exists that expanding the total number of inspections or the average amount of fines for noncompliance would improve its effectiveness significantly. OSHA can best complement the other pillars of the US safety policy system by providing information to workers about possible hazards, particularly health-related hazards, and by gearing inspections toward worksites where dangers are hard to monitor and firms employing less mobile and less knowledgeable workers. It should continue to offer consultation services to smalland medium-sized firms and encourage firms to establish management systems addressing worker safety and health issues.
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In the ongoing debate about the value of cost-benefit analysis, proponents argue it should play a dominant role in policy making. Critics argue that cost-benefit analysis is a seriously flawed basis for this purpose. This Research Report identifies strengths and weaknesses of cost-benefit and cost-effectiveness analysis. It highlights key factors, like age, that can influence the results and provides insights into the role of cost-benefit analysis in government regulations.
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Objectives The purpose of this paper was to explore the behaviour of wage-and-salary earnings of non-Hispanic white, black and Hispanic pharmacists. MethodsA cross-sectional study was conducted based on the responses to a survey questionnaire. The survey was administered to licensed pharmacists in South Florida between September 2006 and March 2007. The main outcome measures of the study were the response of pharmacists' wage-and-salary earnings to the number of hours worked, human-capital stock and job-related preferences. Key findingsThe earnings responses of non-Hispanic white and Hispanic pharmacists largely conformed to patterns reported in the literature, but the earnings of black pharmacists did not. Significant ethnic differences in the effect of the explanatory variables were detected. Conclusions The earnings-determination model developed here was suitable for non-Hispanic white and Hispanic pharmacists, but not for black pharmacists. Pharmacists' earnings-determination processes must address ethnicity-related issues.
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Many studies show that women are more risk averse than men. In this paper, following DeLeire and Levy [Deleire T. and Levy H. (2004) ‘Worker Sorting and the Risk of Death on the Job’, Journal of Labor Economics, Vol. 22, No. 4, pp. 210–217.] for the US, we use family structure as a proxy for the degree of risk aversion to test the proposition that those with strong aversion to risk will make occupational choices biased towards safer jobs. In line with DeLeire and Levy we find that women are more risk averse than men and those that are single with children are more risk averse than those without. The effect on the degree of gender segregation is somewhat smaller than for the US.
Article
Wage-hedonics is used to recover the value of a statistical life (VSL) by exploiting the fact that workers choosing riskier occupations are compensated with a higher wage. Roy (Oxford Economic Papers 3 (1951), 135—46) suggests that observed wage distributions will be distorted if individuals choose jobs according to idiosyncratic returns. We describe how this type of sorting biases wage-hedonic VSL estimates and implement two new estimation strategies that correct that bias. Using data from the Current Population Surveys, we recover VSL estimates that are three to four times larger than those based on the traditional techniques, statistically significant, and robust to a wide array of specifications.
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This document contains supplementary materials to accompany all papers using the “private choices†survey associated with our larger project on the valuation of morbidity and mortality risk reductions for policy analysis. This is a “living document†in that we plan to revise/update/expand its contents as the related research papers move through the review process, so be sure to check the automatic date on the document before comparing versions. A detailed table of contents is provided to guide the reader.
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Objective: To examine the contribution of working conditions to permanent disability status in the immigrant and native-born populations in Spain by investigating the extent to which these two groups differ in terms of exposure to adverse working conditions and the impact of these conditions on disability status. Methods: We used a dataset containing ample information on working lives and disability status and specified three probit models that estimated the following: 1) the extent to which working conditions affect the probability of suffering permanent disability, calculated separately for immigrants and natives; 2) whether immigrants, in particular those from non-European Union-15 countries, have a higher probability of exposure to jobs with a greater rate of illness and injury risk; and 3) whether immigrants have a greater probability of being employed in jobs that concentrate three characteristics we consider to have adverse effects on health. Results: Working conditions (such as illness and injury risk, lack of autonomy, and temporary jobs) have a significant impact on health in both groups, although the effect is higher for Spanish-born workers. Immigrants, particularly non-European Union immigrants, are more likely to be employed in jobs with adverse health conditions. Conclusions: Working conditions have a strong effect on health, similar to that of other variables, such as education. While immigrants are less likely to suffer disability than native-born workers, these differences are diluted the longer they stay in Spain. A labor market that relegates immigrants to the riskier jobs can be expected to translate into future health inequalities.
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The value of mortality risk reduction is an important component of the benefits of environmental policies. In recent years, the number, scope, and quality of valuation studies have increased dramatically. Revealed preference studies of wage compensation for occupational risks, on which analysts have primarily relied, have benefited from improved data and statistical methods. Stated preference research has improved methodologically and expanded dramatically. Studies are now available for several health conditions associated with environmental causes, and researchers have explored many issues concerning the validity of the estimates. With the growing numbers of both types of studies, several meta-analyses have become available that provide insight into the results of both methods. Challenges remain, including better understanding of the persistently smaller estimates from stated preference than from wage differential studies and of how valuation depends on the individual’s age, health status, and characteristics of the illnesses most frequently associated with environmental causes.
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The value of mortality risk reduction is an important component of the benefits of environmental policies. In recent years, the number, scope, and quality of valuation studies have increased dramatically. Revealed-preference studies of wage compensation for occupational risks, on which analysts have primarily relied, have benefited from improved data and statistical methods. Stated-preference research has improved methodologically and expanded dramatically. Studies are now available for several health conditions associated with environmental causes and researchers have explored many issues concerning the validity of the estimates. With the growing numbers of both types of studies, several meta-analyses have become available that provide insight into the results of both methods. Challenges remain, including better understanding of the persistently smaller estimates from stated-preference than from wage-differential studies and of how valuation depends on the individual’s age, health status, and characteristics of the illnesses most frequently associated with environmental causes.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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What is the relationship among fear, danger, and the law? There are serious problems with the increasingly influential Precautionary Principle - the idea that regulators should take steps to protect against potential harms, even if causal chains are uncertain and even if we do not know that harms are likely to come to fruition. An investigation of such problems as global warming, terrorism, DDT, and genetic engineering shows that the Precautionary Principle is incoherent. Risks exist on all sides of social situations, and precautionary steps create dangers of their own. The idea of precaution seems operational only because diverse cultures focus on very different risks, with social influences and peer pressures accentuating some fears and reduce others. Cascades, the availability heuristic, loss aversion, and group polarization are highly relevant here. Instead of adopting the Precautionary Principle, regulators should take three steps: they should adopt a narrow Anti-Catastrophe Principle, designed for the most serious risks; pay close attention to costs and benefits; and accept an approach called "libertarian paternalism," designed to respect freedom of choice while also moving people in directions that will make their lives go better. An understanding of the dynamics of fear also shows how free societies can protect liberty amidst fears about terrorism and national security.
Article
Our society faces many risks that affect human life. Cost-benefit analysis is a very popular project-evaluation tool for reducing these social risks. The government has to set projects or regulations whose benefits will outweigh costs. It is quite easy to evaluate costs but how to evaluate the benefits linked to protecting human life? Since the 1970s, many values of life have been estimated with different methods. The wide variability of the results range from 0,5 million up to 50 million ($US, 2000). The main goal of this study is to analyze the source of this variability in results. We also want to determine a reasonable value for public decision making.Notre société fait face à de nombreux risques qui affectent des vies humaines. Les autorités publiques doivent donc déterminer le budget optimal à consacrer à chaque projet visant à diminuer ces risques sociaux. L’analyse avantages-coûts est un outil très utilisé pour l’évaluation de ces projets. La tâche du gouvernement est de mettre en place des projets ou des réglementations qui génèreront des bénéfices supérieurs aux coûts de leur implantation. Les coûts sont habituellement assez faciles à déterminer, mais comment évaluer les bénéfices reliés à la sauvegarde de vies humaines? Depuis les années 70, le nombre d’études réalisées sur la mesure de la valeur statistique d’une vie humaine (VSV) est impressionnant. Plusieurs valeurs ont été estimées, et ce, à l’aide de différentes méthodes. La difficulté des gouvernements à choisir une valeur, provient de la grande variabilité dans les résultats obtenus. En effet, les VSV observées varient de 0,5 million de dollars jusqu'à 50 millions de dollars ($ US 2000). L’objectif principal de cet article est d’aider à comprendre d’où vient cette grande variabilité dans les résultats. Nous voulons aussi déterminer quelle valeur nous semble la plus raisonnable.
Article
Our study expands the hedonic wage framework to take advantage of the inherent differences in workplace deaths, both in type and probability of occurrence, and examines revealed preferences over these heterogeneous risks. We use data on all fatal workplace deaths in the US from 1992 to 1997 and develop risk rates that are differentiated by how the fatal injury occurred. Within sample tests of the equality of compensating wage differentials for heterogeneous risks indicate that we can reject aggregation of homicide risks with other sources of workplace fatalities. However, our results are not without qualification and highlight important nuances of the labor market as related to estimating compensating wage differentials for risks that have generally been ignored in the previous literature.
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We present the first nationwide value of life estimates for the United States at more than one point in time. Our estimates are for every ten years between 1940 and 1980, a period when declines in fatal accident rates were historically unprecedented. Our estimated elasticity of value of life with respect to per capita GNP is 1.5 to 1.7. We illustrate the importance of rising value of life for policy evaluation by examining the benefits of improved longevity since 1900. Our estimated elasticity implies that the current marginal increase in longevity is more valuable than the large increase in the first half of the twentieth century.
Article
This paper reports the stated preference values for reducing the morbidity risks from drinking water estimated using a nationally representative U.S. sample of 3,585 households. Based on the average annual gastrointestinal (GI) illness risk in the U.S. from drinking water of about 5 illnesses per 100 population, eliminating the GI risk has a median annual value per household of $219. The considerable heterogeneity in the values arises largely from differences in attitudes towards risk and price sensitivity. Using interval regressions, we find that valuations are greater for those who perceive a high personal risk, consume a large quantity of tap water, or are environmentalists. The paper explores several methodological issues pertaining to the iterative choice format involving a choice between two policies characterized by their cost and GI risk. The analysis adjusts for starting point effects by basing valuations on the tradeoffs that are estimated to prevail at the “equitable tradeoff rate,” which is the starting cost-water quality tradeoff rate that produces a 50–50 split in the initial policy choice between policies with greater tradeoff rates and policies with lower tradeoff rates. The heterogeneity in valuations is also explored by examining quantile regression results and the determinants of the unbounded valuation amounts at the low and high extremes. KeywordsDrinking water–Gastrointestinal illness–Morbidity risk–Stated preference survey–Willingness to pay–Starting point bias
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Our research infers the effects of institutionalized wage setting and length worker-firm attachment by comparing estimated compensating wage differentials for fatal injury risk in Japanese, Australian, and U.S. manufacturing. Hedonic labor market equilibrium regressions for Japan reveal a statistically fragile compensating wage differential of 0 percent to 1.4 percent for exposure to the average fatality risk compared to employment in a perfectly safe workplace. Australian workers receive a statistically robust 2.5 percent estimated wage premium. Using new data on work-related fatalities, we find a 1 percent compensating wage differential in U.S. manufacturing that becomes more positive and statistically less significant as data are aggregated. Copyright 1991 by Kluwer Academic Publishers
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We examine the incidence, form, and research consequences of measurement error in measures of fatal injury risk in U.S. workplaces using both Bureau of Labor Statistics and National Intitute of Occupational Safety and Health data. Of the various measures examined the NIOSH industry risk measure produces implicit value of life estimates most in line with both economic theory and the mode result for the existing literature. Because we find non-classical measurement error that differs across risk measures and is not independent of other regressors, innovative statistical procedures need be applied to obtain statistically improved estimates of wage-fatality risk tradeoffs. Copyright 2003 by Kluwer Academic Publishers
Article
The safety of the work place is now a highly visible public issue. Many are calling for tighter regulation to reduce worker risk, while others feel government intervention is ineffective and costly. Here Kip Viscusi explores how well markets for hazardous jobs actually work. According to classical economics, other things being equal, a worker will demand more pay for a hazardous job than a safe one. However, this assumes that job related hazards are known, when often they are not. Using recent advances in the economics of information, Viscusi develops a theory of individual responses to job hazards under conditions of uncertainty.His assumptions are that hazards are uncertain events and that learning about them is a process that takes place over time. He then employs this analysis to study the performance of job markets in matching persons and jobs and in compensating persons for exposure to hazards. Finally he tests his adaptive model of the decision to quit and finds substantial evidence that risks are indeed reflected in wage differentials and quit behavior.
Article
Using an original data set that allowed us to measure the job risk perceived by individuals as well as smoking and seatbelt use, we found that cigarette smokers and nonseatbelt wearers receive a lower compensating differential for risk than nonsmokers and seatbelt wearers. While workers on average have an implicit value of a nonfatal lost workday injury of $48,000, this value is $81,000 for nonsmoking workers who wear seatbelts, with no evidence of a positive valuation for workers who smoke and do not wear a seatbelt. Our results imply that individual differences in other health-related activities are influential determinants of the observed wage-risk tradeoff. We also found significant compensating differentials for several nonrisk job attributes.
Article
This paper examines the extent of response errors in labor market survey data and explores the implications of such errors for economic analysis. Explicitly examined are responses to questions on industry, occupation, union status, hours worked, and wages. Analyses are based on two sources: (1) a special supplement to the January 1977 Current Population Survey that obtained data from workers and their employers and (2) an exact match of workers and their employers interviewed in the Employment Opportunity Pilot Project Survey. The dual nature of these surveys provides a basis for analyzing the effect of response error on a variety of economic analyses including the trade-off between wages and risk, the wage impact of unionism, and the sensitivity of wage-determination models to alternative responses to earnings questions.
Article
Using a large data set, the authors find that smokers select riskier jobs, but receive lower total wage compensation for risk than do nonsmokers. This finding is inconsistent with conventional models of compensating differentials. The authors develop a model in which worker risk preferences and job safety performance lead to smokers facing a flatter market offer curve than nonsmokers. The empirical results support the theoretical model. Smokers are injured more often controlling for their job's objective risk and are paid less for these risks of injury. Smokers and nonsmokers, in effect, are segmented labor market groups with different preferences and different market offer curves. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog
Article
The worker fatality risk variable constructed for this article uses BLS data on total worker deaths by both occupation and industry over the 1992--97 period rather than death risks by occupation or industry alone, as in past studies. The subsequent estimates using 1997 CPS data indicate a value of life of $4.7 million for the full sample, $7.0 million for blue-collar males, and $8.5 million for blue-collar females. Unlike previous estimates, these values account for the influence of clustering of the job risk variable and compensating differentials for both workers' compensation and nonfatal job risks. (JEL J3, I1) Copyright 2004, Oxford University Press.
Article
A substantial literature over the past thirty years has evaluated tradeoffs between money and fatality risks. These values in turn serve as estimates of the value of a statistical life. This article reviews more than 60 studies of mortality risk premiums from ten countries and approximately 40 studies that present estimates of injury risk premiums. This critical review examines a variety of econometric issues, the role of unionization in risk premiums, and the effects of age on the value of a statistical life. Our meta-analysis indicates an income elasticity of the value of a statistical life from about 0.5 to 0.6. The paper also presents a detailed discussion of policy applications of these value of a statistical life estimates and related issues, including risk-risk analysis. Copyright 2003 by Kluwer Academic Publishers
Article
Using data from a large national sample, this article examines how individual differences in risk attitudes affect wage-risk tradeoffs. Smoking and seat belt use are used as proxies for individual willingness to bear risk. Workers who by their behavior indicate a high value of safety - e.g., nonsmokers and seat belt wearers - receive a higher compensating differential per unit of job risk than do workers who engage in either one of the risky behaviors. For the overall sample, the implicit value of a lost workday injury is $79,632. This value ranges from $54,878 for smokers who do not wear a seat belt, to $102,552 for nonsmokers who wear a seat belt. Copyright 1995 by Kluwer Academic Publishers
Article
Reviews the theory of compensating wage differentials associated with disagreeable job characteristics. Discussion of the theory of compensating wage differentials; Job characteristics viwed as disagreeable by the marginal worker; Policy implications. (Abstract copyright EBSCO.)
Article
Publisher Summary The chapter presents a discussion on the theory of equalizing differences. The theory of equalizing differences refers to observed wage differentials required to equalize the total monetary and nonmonetary advantages or disadvantages among work activities and among workers themselves. On the conceptual level, it can make legitimate claim to be the fundamental (long-run) market equilibrium construct in labor economics. Its empirical importance lies in contributing useful understanding to the determinants of the structure of wages in the economy and for making inferences about preferences and technology from observed wage data. Measurable job attributes on which compensating wage differentials have been shown to arise empirically include (1) onerous working conditions, such as risks to life and health, exposure to pollution, and so forth; (2) intercity and interregional wage differences associated with differences in climate, crime, pollution, and crowding; (3) special work-time scheduling and related requirements, including shift work, inflexible work schedules, and possible risks of layoff and subsequent unemployment; and (4) the composition of pay packages, including vacations, pensions, and other fringe benefits as substitutes for direct cash wage payments. Another important class of problems identifies work environments with investment rather than with consumption. Market equilibrium is defined by equality between demand and supply for workers on each type of job.
Article
This paper recognizes that compensating differentials are a function of the income tax rate, using this observation to introduce a methodology for estimating compensating differentials with a specific application to the value of a statistical life (VSL). When taxes change, the pre-tax wages of risky jobs should shift relative to the pre-tax wages of safe jobs in a manner proportional to the VSL. This approach controls for fixed effects without using industry-specific changes in risk as a source of identification. The strategy yields VSL estimates between $50 million and $75 million, an order of magnitude higher than the previous literature.
Article
En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamientos, muchos abogan por una conjunci�n de medidas tanto restrictivas como alternativas al uso del coche. Dentro de las primeras se encuentra el establecimiento de un peaje o una tarifa por el uso de las carreteras, medida que aunque desde el punto de vista de la Teor�a Econ�mica es la manera m�s eficiente para corregir el fallo de mercado que supone la congesti�n, desde la visi�n de pol�ticos y del p�blico no goza de gran aceptaci�n. En este trabajo se pretende hacer una simulaci�n de los efectos que tendr�a sobre el bienestar social de la implantaci�n de una medida de este tipo en la Bah�a de C�diz. In the European Union it has been estimated that the congestion cost are the 2% of the gross domestic product and the cost of pollution and noise is over 0,6%, olso it is known that the 90% of this cost are caused by overland transport. For this reason and for the always increasing demand of private transport, there are professionals who thinks that the solution have to be restrictive measures added to alternatives to the car. road pricing is a restrictive measures that for the economic theory is the most efficient way to solve congestion cost but for politicians and user of transport is not always accepted. In this study we are going to simulate road pricing for commuters in the Bah�a of C�diz and then it will be estimated welfare effects.
Compensation Mechanisms for Job Risks Princeton
  • Michael J Moore
  • W Kip Viscusi
Moore, Michael J. and W. Kip Viscusi. (1990). Compensation Mechanisms for Job Risks Princeton: Princeton University Press.
Compensating Differentials for Gender-Specific Job Injury Risks
  • Dan A Black
The Value of a Statistical Life: A Critical Review of Market Es timates Throughout the World
  • W Viscusi