Question

Polly Perish was working at a somewhat risky occupation, where she had a 0.1% chance (or probability 0.001) of dying during the year. She found and accepted a very similar job that paid $4000 more, but it increased her chance of dying to 0.15%. If we use the information from Pollys decision, what estimate would we place on the value of a statistical life?
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Answer #1

Value of statistical life = Increase in wages /Willingness to accept / Increased risk

= 4000/(0.15% - 0.1%)

= 8,000,000

= 8 million.

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