Essentials of Economics 7th Edition by Gregory Mankiw

Exercise 19

High-income people are willing to pay more than lower-income people to avoid the risk of death. For example, they are more likely to pay for safety features on cars. Do you think cost-benefit analysts should take this fact into account when evaluating public projects? Con-sider, ,for instance, a rich town and a poor town, both of which are considering the installation of a traffic light. Should the rich town use a higher dollar value for a human life in making this decision? Why or why not?