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Differences in Subjective Risk Thresholds: Worker Groups as an Example

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Author Info

  • Anil Gaba

    (INSEAD, Boulevard de Constance, Fontainebleau 77305, France)

  • W. Kip Viscusi

    (John F. Cogan Jr. Professor of Law and Economics, Harvard Law School, Hauser 302, Cambridge, Massachusetts 02138)

Abstract

Subjective risk perceptions are often encoded as responses to 0-1 questions in surveys or other qualitative risk scales. However, reference points for assessing an activity as risky are confounded by various characteristics of the respondents. This paper uses a sample of workers for whom quantitative risk assessments as well as dichotomous risk perception responses are available. It is shown that, given a quantitative risk measure, the thresholds for assessing an activity as "risky" vary systematically, particularly by education. The differences in such thresholds across worker groups are estimated. The resulting implications of using qualitative risk variables for assessing wage-risk tradeoffs are estimated, yielding results that are also relevant for many other areas involving similar qualitative variables.

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File URL: http://dx.doi.org/10.1287/mnsc.44.6.801
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 44 (1998)
Issue (Month): 6 (June)
Pages: 801-811

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Handle: RePEc:inm:ormnsc:v:44:y:1998:i:6:p:801-811

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Related research

Keywords: Risk Perceptions; Risk Thresholds; Risk Premiums; Dichotomous Variables;

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Cited by:
  1. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc.
  2. Thomas Leoni, 2010. "What drives the perception of health and safety risks in the workplace? Evidence from European labour markets," Empirica, Springer, vol. 37(2), pages 165-195, May.

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