How do economists go about estimating the value of life in the context of job safety regulation?
A) They add up the cost of implementing all of the job safety features in firms that have excellent job safety records.
B) They estimate the compensating wage differential that workers in a dangerous occupation receive for the level of risk that they assume, and then extrapolate that figure for a scenario in which the risk is reduced to zero.
C) They take the amounts that are rewarded to victims' families in wrongful death law suits.
D) They estimate the difference between profits that are earned by firms with dangerous working conditions versus those with safer working conditions.
E) They never engage in such an exercise, as life is infinitely precious and thus no value can be placed upon it.

Question

Quizplus · Accepted Answer

Economists estimate the value of life in the context of job safety regulation by looking at the compensating wage differential. This approach involves observing how much extra pay workers require to accept jobs with higher risks, thereby providing a market-based valuation of the risks to life and health.

How Do Economists Go About Estimating the Value of Life