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Valuing risk reductions: Incorporating risk heterogeneity into a revealed preference framework

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  • Scotton, Carol R.
  • Taylor, Laura O.

Abstract

Our study expands the hedonic wage framework to take advantage of the inherent differences in workplace deaths, both in type and probability of occurrence, and examines revealed preferences over these heterogeneous risks. We use data on all fatal workplace deaths in the US from 1992 to 1997 and develop risk rates that are differentiated by how the fatal injury occurred. Within sample tests of the equality of compensating wage differentials for heterogeneous risks indicate that we can reject aggregation of homicide risks with other sources of workplace fatalities. However, our results are not without qualification and highlight important nuances of the labor market as related to estimating compensating wage differentials for risks that have generally been ignored in the previous literature.

Suggested Citation

  • Scotton, Carol R. & Taylor, Laura O., 2011. "Valuing risk reductions: Incorporating risk heterogeneity into a revealed preference framework," Resource and Energy Economics, Elsevier, vol. 33(2), pages 381-397, May.
  • Handle: RePEc:eee:resene:v:33:y:2011:i:2:p:381-397
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. W. Kip Viscusi, 2015. "The Role of Publication Selection Bias in Estimates of the Value of a Statistical Life," American Journal of Health Economics, MIT Press, vol. 1(1), pages 27-52, Winter.
    2. Jonathan M. Lee & Laura O. Taylor, 2014. "Randomized Safety Inspections And Risk Exposure On The Job: Quasi-Experimental Estimates Of The Value Of A Statistical Life," Working Papers 14-05, Center for Economic Studies, U.S. Census Bureau.
    3. Gentry, Elissa Philip & Viscusi, W. Kip, 2016. "The fatality and morbidity components of the value of statistical life," Journal of Health Economics, Elsevier, vol. 46(C), pages 90-99.
    4. repec:cen:wpaper:12-21 is not listed on IDEAS
    5. Stephen C. Newbold, 2011. "Valuing Health Risk Changes Using a Life-Cycle Consumption Framework," NCEE Working Paper Series 201103, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Apr 2011.
    6. Maureen Cropper & James K. Hammitt & Lisa A. Robinson, 2011. "Valuing Mortality Risk Reductions: Progress and Challenges," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 313-336, October.
    7. Kochi, Ikuho & Taylor, Laura O., 2011. "Risk Heterogeneity and the Value of Reducing Fatal Risks: Further Market-Based Evidence," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 2(03), pages 1-28, August.
    8. W. Viscusi & Elissa Gentry, 2015. "The value of a statistical life for transportation regulations: A test of the benefits transfer methodology," Journal of Risk and Uncertainty, Springer, vol. 51(1), pages 53-77, August.
    9. Scotton Carol R., 2013. "New risk rates, inter-industry differentials and the magnitude of VSL estimates," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(1), pages 39-80, March.

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