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Willingness to Accept Equals Willingness to Pay for Labor Market Estimates of the Value of Statistical Life

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Author Info

  • Kniesner, Thomas J.

    ()
    (Syracuse University)

  • Viscusi, W. Kip

    ()
    (Vanderbilt University)

  • Ziliak, James P.

    ()
    (University of Kentucky)

Abstract

Our research clarifies the conceptual linkages among willingness to pay for additional safety, willingness to accept less safety, and the value of statistical life (VSL). We present econometric estimates that in the important case of workers' decisions concerning exposure to fatal injury risk there is no statistically significant divergence between willingness to accept and willingness to pay. Our focal result contrasts with the literature documenting a considerable asymmetry in tradeoff rates for increases and decreases in risk. An important implication for policy is that it is reasonable to use labor market estimates of VSL as a measure of the willingness to pay for additional safety.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6816.

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Length: 30 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6816

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Keywords: willingness to pay; willingness to accept; value of statistical life; VSL; CFOI; panel data; PSID;

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References

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  1. Koszegi, Botond & Rabin, Matthew, 2004. "A Model of Reference-Dependent Preferences," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt0w82b6nm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. James P. Ziliak & Thomas J. Kniesner, 1998. "The Importance of Sample Attrition in Life Cycle Labor Supply Estimation," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 507-530.
  3. Lillard, Lee A & Weiss, Yoram, 1979. "Components of Variation in Panel Earnings Data: American Scientists, 1960-70," Econometrica, Econometric Society, Econometric Society, vol. 47(2), pages 437-54, March.
  4. Schaffner, Sandra & Spengler, Hannes, 2010. "Using job changes to evaluate the bias of value of a statistical life estimates," Resource and Energy Economics, Elsevier, Elsevier, vol. 32(1), pages 15-27, January.
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  7. W. Kip Viscusi & Wesley A. Magat & Joel Huber, 1987. "An Investigation of the Rationality of Consumer Valuations of Multiple Health Risks," RAND Journal of Economics, The RAND Corporation, vol. 18(4), pages 465-479, Winter.
  8. Gary Solon, 1986. "Bias in Longitudinal Estimation of Wage Gaps," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0058, National Bureau of Economic Research, Inc.
  9. Viscusi, W Kip & Aldy, Joseph E, 2003. " The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, Springer, vol. 27(1), pages 5-76, August.
  10. Ernesto Villanueva, 2007. "Estimating Compensating Wage Differentials Using Voluntary Job Changes: Evidence from Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(4), pages 544-561, July.
  11. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 41-71, February.
  12. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, Econometric Society, vol. 47(2), pages 263-91, March.
  13. Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
  14. repec:reg:wpaper:282 is not listed on IDEAS
  15. W. Kip Viscusi, 2004. "The Value of Life: Estimates with Risks by Occupation and Industry," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 42(1), pages 29-48, January.
  16. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2012. "The Value of a Statistical Life: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 74-87, February.
  17. Daniel S. Hamermesh, 1999. "The Art of Labormetrics," NBER Working Papers 6927, National Bureau of Economic Research, Inc.
  18. Jushan Bai, 2009. "Panel Data Models With Interactive Fixed Effects," Econometrica, Econometric Society, Econometric Society, vol. 77(4), pages 1229-1279, 07.
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