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


  • Kniesner, Thomas J.

    () (Claremont Graduate University)

  • Viscusi, W. Kip

    () (Vanderbilt University)

  • Ziliak, James P.

    () (University of Kentucky)


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.

Suggested Citation

  • Kniesner, Thomas J. & Viscusi, W. Kip & Ziliak, James P., 2012. "Willingness to Accept Equals Willingness to Pay for Labor Market Estimates of the Value of Statistical Life," IZA Discussion Papers 6816, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6816

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    References listed on IDEAS

    1. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1133-1165.
    2. 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.
    3. 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.
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    7. Gary Solon, 1986. "Bias in Longitudinal Estimation of Wage Gaps," NBER Technical Working Papers 0058, National Bureau of Economic Research, Inc.
    8. Knetsch, Jack L. & Riyanto, Yohanes E. & Zong, Jichuan, 2012. "Gain and Loss Domains and the Choice of Welfare Measure of Positive and Negative Changes," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 3(04), pages 1-18, December.
    9. Schaffner, Sandra & Spengler, Hannes, 2010. "Using job changes to evaluate the bias of value of a statistical life estimates," Resource and Energy Economics, Elsevier, vol. 32(1), pages 15-27, January.
    10. W. Kip Viscusi, 2004. "The Value of Life: Estimates with Risks by Occupation and Industry," Economic Inquiry, Western Economic Association International, vol. 42(1), pages 29-48, January.
    11. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    12. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    13. W. Viscusi & Joel Huber, 2012. "Reference-dependent valuations of risk: Why willingness-to-accept exceeds willingness-to-pay," Journal of Risk and Uncertainty, Springer, vol. 44(1), pages 19-44, February.
    14. Daniel S. Hamermesh, 1999. "The Art of Labormetrics," NBER Working Papers 6927, National Bureau of Economic Research, Inc.
    15. Susan Chilton & Michael Jones-Lee & Rebecca McDonald & Hugh Metcalf, 2012. "Does the WTA/WTP ratio diminish as the severity of a health complaint is reduced? Testing for smoothness of the underlying utility of wealth function," Journal of Risk and Uncertainty, Springer, vol. 45(1), pages 1-24, August.
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    17. 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.
    18. Jushan Bai, 2009. "Panel Data Models With Interactive Fixed Effects," Econometrica, Econometric Society, vol. 77(4), pages 1229-1279, July.
    19. Charles Brown, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 94(1), pages 113-134.
    20. 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.
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    Cited by:

    1. Sunstein, Cass R., 2013. "The value of a statistical life: some clarifications and puzzles," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 4(02), pages 237-261, August.
    2. Kip Viscusi, W. & Gayer, Ted, 2016. "Rational Benefit Assessment for an Irrational World: Toward a Behavioral Transfer Test," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 7(01), pages 69-91, March.
    3. Tadahiro Okuyama, 2017. "A risk benefit calculation method based on consumer behavior and household risk production function," Economics Bulletin, AccessEcon, vol. 37(2), pages 645-652.
    4. repec:kap:jrisku:v:54:y:2017:i:2:d:10.1007_s11166-017-9255-1 is not listed on IDEAS

    More about this item


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

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)

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