Complementary and the measurement of Individual Risk Tradeoffs: Accounting for Quantity and Quality of Life Effects

Mary Evans and V. Kerry Smith

Chapter 5 in The Economics of Environmental Risk, 2022, pp 77-96 from Edward Elgar Publishing

Abstract: This paper considers the factors responsible for differences with age in estimates of the wage compensation an individual requires to accept increased occupational fatality risk. We derive a relationship between the value of a statistical life (VSL) and the degree of complementarity between consumption and labor supplied when health status serves as a potential source of variation in this relationship. Our empirical analysis finds that variations in an individual's health status or quality of life and anticipated longevity threats lead to significant differences in the estimated wage/risk tradeoffs. We describe how extensions to the specification of hedonic wage models, including measures for quality of life and anticipated longevity threats, help to explain the diversity in past studies examining how the estimated wage-risk tradeoff changes with age.

Keywords: Economics and Finance; Environment; Politics and Public Policy (search for similar items in EconPapers)
Date: 2022
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Related works:
Journal Article: Complementarity and the Measurement of Individual Risk Tradeoffs: Accounting for Quantity and Quality of Life Effects (2008)
Working Paper: Complementarity and the Measurement of Individual Risk Tradeoffs: Accounting for Quantity and Quality of Life Effects (2008)
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