Compensating Wage Differentials, Value of Statistical Life, Workplace Safety, Occupational Safety
Working Papers Series
Economic Policy | Economics | Public Affairs, Public Policy and Public Administration
Behavioral bias in occupational fatality risk is introduced to the theoretical framework of hedonic wages, yielding an endogenous risk ceiling that increases social welfare. Empirically, bias is most evident among workers with no high school diploma, who do not report relatively greater exposure to death in high fatality rate occupations. These findings suggest that extant population estimates of value of statistical life are biased downwards and should be factored by at least 1.35. Under reasonable assumptions, simulations suggest an optimal risk ceiling between 73.0 to 85.9 percentile of the population distribution of occupational fatality risk.
Singleton, Perry, "Behavioral Bias in Occupational Fatality Risk: Theory, Evidence, and Implications" (2021). Center for Policy Research. 374.
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