Discounting Long-Term Job-Related Health Risks in the Context of Indian Workers

Discount rate plays a very important role in cost–benefit analysis of environmental, health and occupational safety policies. Since resources are limited, valuing the future benefits at present value using a discount rate becomes necessary for a government to decide on worthiness of any project. In this context, the choice of discount rate is a debated issue, especially for developing countries where such studies are scarce. The present study attempts to address this issue by estimating the discount rate for long-term job-related health risks of a sample of workers from an Indian city, Ahmedabad. These job risks pertain to environmental health risks and unhealthy work conditions. In this study, an extension of the standard hedonic wage method is used which captures the inter-temporal aspect of worker’s decision on choice of job risk and thereby reveals their implicit rate of time preference. The estimated discount rate for this study ranges between 2.6 and 18.6%. These estimates are consistent with the estimates of developed and developing countries. The corresponding value of statistical life ranges between INR 46.3 million ($0.69 million) and INR 81.28 million ($1.21 million). The discount rates calculated in this work will benefit policymakers in India and other developing countries in evaluating and designing various policies.