How to measure the statistical values of a life suppose there are 2 jobs that differ only in
ly mobile between jobs.
Then , in equilibrium, it must be the case that:
W1+A1=W2+A2
Where wi= wage component of compensation
Ai= negative monetary value associated with the likelihood of death on the job
Suppost job 1 is perfectly safe, so A1=0 then:
W1=W2+A2
Let W1= $50,000/ year
Suppose, too, that the likelihood of dying in job 2 during any given year is 1 in 10,000
Denote this rish using small Greek rho, p=1/10,000
And finally, suppose we know that A2 takes the form
A2=p x c
Where C is the compensation required per unit risk, p.
W1=w2+A2
=W2pC,
So,
W2=W1+pC
W2=$50,000 + 1/10,000C
C is higher, the more people value their lives. And the more people value their lives, the
higer the wage in the dangerous job will be in equilibrium.
Suppose, that, in equilibrium,
W2= $50,200
W1=$50,000
Clearly, A2= $200/yr
This means that 10,000 people would be willing to accept 1 death per year amongst them
(remember, p=1/10,000) in return for a total payment of:
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 Spring '08
 Roth
 statistical value, life suppose, Suppost

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