2008_04_29_Notes

# 2008_04_29_Notes - UP FRONT Exam May 15 2-4:30 PM Warren...

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UP FRONT, 4-29-08 Exam May 15 2-4:30 PM, Warren room 131 Dan special office hours. I leave on May 10 to present our research on design changes that may be needed in the Regional Greenhouse Gas Initiative, at a power-system research meeting. o Who would like to come but could not make Tuesday, May 6, 1:30 - 3? o Who would like to come but could not make Wednesday, May 7, 4:30 – 6? o Who would like to come but could not make Thursday, May 8, 4 – 5:30? Outline for Today 1) Hedonic valuation/value of a statistical life 2) Choice modeling/conjoint analysis 3) Environmental economics in one page

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Value of Statistical Life (VSL) from Wage Studies People make choices where they voluntarily face trade- offs between risks to life and health and other goods. All other things being equal, people generally require higher wages to perform more dangerous jobs and would be willing to pay more for safer products. How much people would have to be paid for more dangerous jobs and how much people would be willing to pay for safer products gives direct monetary measures of the value people place on risks to life and health. Suppose you are willing to accept \$10 a year extra for a one-in-a-million (1 X 10 -6 ) chance of a fatal injury. What is your value of a statistical life? “The value of life is not a universal constant, but reflects the wage-risk tradeoff pertinent to the preferences of the workers in a particular sample. The mix of workers in these samples is quite different - with the bulk of estimates in the \$3 to \$7 million range. ..” (in \$1990).
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2008_04_29_Notes - UP FRONT Exam May 15 2-4:30 PM Warren...

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