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The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals
This article estimates the value of a statistical life (VSL) for Chile under the hedonic wage method while accounting for individual risk preferences. Two alternative measures of risk aversion are used. First, risk aversion is directly measured using survey measures of preferences over hypothetical...
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Published in: | Risk analysis 2019-11, Vol.39 (11), p.2369-2390 |
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creator | Parada‐Contzen, Marcela V. |
description | This article estimates the value of a statistical life (VSL) for Chile under the hedonic wage method while accounting for individual risk preferences. Two alternative measures of risk aversion are used. First, risk aversion is directly measured using survey measures of preferences over hypothetical gambles, and second, over observed individual behaviors that may proxy for risk preferences, such as smoking status, are used. I reconcile the results with a theoretical model of economic behavior that predicts how the wage‐risk tradeoff changes as risk aversion differs across individuals. The VSL estimates range between 0.61 and 8.68 million dollars. The results using smoking behavior as a proxy for risk attitudes are consistent with previous findings. However, directly measuring risk aversion corrects the wage‐risk tradeoff estimation bias in the opposite direction. The results are robust to other observed measures of risk aversion such as drinking behavior and stock investments. Results suggest that, consistent with the literature that connects smoking behavior with labor market outcomes, smoking status could be capturing poor health productivity effect in addition to purely risk preferences. |
doi_str_mv | 10.1111/risa.13329 |
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Two alternative measures of risk aversion are used. First, risk aversion is directly measured using survey measures of preferences over hypothetical gambles, and second, over observed individual behaviors that may proxy for risk preferences, such as smoking status, are used. I reconcile the results with a theoretical model of economic behavior that predicts how the wage‐risk tradeoff changes as risk aversion differs across individuals. The VSL estimates range between 0.61 and 8.68 million dollars. The results using smoking behavior as a proxy for risk attitudes are consistent with previous findings. However, directly measuring risk aversion corrects the wage‐risk tradeoff estimation bias in the opposite direction. The results are robust to other observed measures of risk aversion such as drinking behavior and stock investments. Results suggest that, consistent with the literature that connects smoking behavior with labor market outcomes, smoking status could be capturing poor health productivity effect in addition to purely risk preferences.</description><subject>Aversion</subject><subject>Drinking behavior</subject><subject>Economic behavior</subject><subject>Economic models</subject><subject>Elicited risk aversion</subject><subject>Estimation bias</subject><subject>Health status</subject><subject>Labor market</subject><subject>Productivity</subject><subject>Risk</subject><subject>Risk assessment</subject><subject>risk attitudes</subject><subject>Risk aversion</subject><subject>Risk preferences</subject><subject>Smoking</subject><subject>Statistics</subject><subject>Tradeoffs</subject><subject>value of a statistical life</subject><issn>0272-4332</issn><issn>1539-6924</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2019</creationdate><recordtype>article</recordtype><sourceid>8BJ</sourceid><recordid>eNp9kE9PwjAYhxujEUQvfgDTxIsxGfZtu247EuIfEhINEK9N2TotjA1bhuHmR_Az-kksDjx48L38krdPnzY_hM6BdMHPjTVOdYExmhygNoQsCURC-SFqExrRgPuDFjpxbkYIEBJGx6jFAEgcCtFGT5NXjZ9VUWtc5Vjh8UqtjFuZVBV4aHKN88rikXHzr4_P3lpbp7Eqs_1mrPXclC94UGZmbbJaFe4UHeU-9NkuO2h8dzvpPwTDx_tBvzcMUhZGSaDTiE2nwKOIxDFwwmhMUshJnPNQcJJALgQXTGQg2JSTiDLBIeaUitjfYB101ViXtnqrtVvJhXGpLgpV6qp2klJGt2LGPHr5B51VtS393yRlQCEKmX-jg64bKrWVc1bncmnNQtmNBCK3Lctty_KnZQ9f7JT1dKGzX3RfqwegAd5NoTf_qORoMO410m-EQYTg</recordid><startdate>201911</startdate><enddate>201911</enddate><creator>Parada‐Contzen, Marcela V.</creator><general>Blackwell Publishing Ltd</general><scope>NPM</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7ST</scope><scope>7U7</scope><scope>7U9</scope><scope>8BJ</scope><scope>8FD</scope><scope>C1K</scope><scope>FQK</scope><scope>FR3</scope><scope>H94</scope><scope>JBE</scope><scope>JQ2</scope><scope>KR7</scope><scope>M7N</scope><scope>SOI</scope><scope>7X8</scope><orcidid>https://orcid.org/0000-0002-5649-7592</orcidid></search><sort><creationdate>201911</creationdate><title>The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals</title><author>Parada‐Contzen, Marcela V.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c3579-ec73bb14770881403280c1f08f4564091f664636d163b407236418422687083</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2019</creationdate><topic>Aversion</topic><topic>Drinking behavior</topic><topic>Economic behavior</topic><topic>Economic models</topic><topic>Elicited risk aversion</topic><topic>Estimation bias</topic><topic>Health status</topic><topic>Labor market</topic><topic>Productivity</topic><topic>Risk</topic><topic>Risk assessment</topic><topic>risk attitudes</topic><topic>Risk aversion</topic><topic>Risk preferences</topic><topic>Smoking</topic><topic>Statistics</topic><topic>Tradeoffs</topic><topic>value of a statistical life</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Parada‐Contzen, Marcela V.</creatorcontrib><collection>PubMed</collection><collection>CrossRef</collection><collection>Environment Abstracts</collection><collection>Toxicology Abstracts</collection><collection>Virology and AIDS Abstracts</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>Technology Research Database</collection><collection>Environmental Sciences and Pollution Management</collection><collection>International Bibliography of the Social Sciences</collection><collection>Engineering Research Database</collection><collection>AIDS and Cancer Research Abstracts</collection><collection>International Bibliography of the Social Sciences</collection><collection>ProQuest Computer Science Collection</collection><collection>Civil Engineering Abstracts</collection><collection>Algology Mycology and Protozoology Abstracts (Microbiology C)</collection><collection>Environment Abstracts</collection><collection>MEDLINE - Academic</collection><jtitle>Risk analysis</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Parada‐Contzen, Marcela V.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals</atitle><jtitle>Risk analysis</jtitle><addtitle>Risk Anal</addtitle><date>2019-11</date><risdate>2019</risdate><volume>39</volume><issue>11</issue><spage>2369</spage><epage>2390</epage><pages>2369-2390</pages><issn>0272-4332</issn><eissn>1539-6924</eissn><abstract>This article estimates the value of a statistical life (VSL) for Chile under the hedonic wage method while accounting for individual risk preferences. Two alternative measures of risk aversion are used. First, risk aversion is directly measured using survey measures of preferences over hypothetical gambles, and second, over observed individual behaviors that may proxy for risk preferences, such as smoking status, are used. I reconcile the results with a theoretical model of economic behavior that predicts how the wage‐risk tradeoff changes as risk aversion differs across individuals. The VSL estimates range between 0.61 and 8.68 million dollars. The results using smoking behavior as a proxy for risk attitudes are consistent with previous findings. However, directly measuring risk aversion corrects the wage‐risk tradeoff estimation bias in the opposite direction. The results are robust to other observed measures of risk aversion such as drinking behavior and stock investments. 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subjects | Aversion Drinking behavior Economic behavior Economic models Elicited risk aversion Estimation bias Health status Labor market Productivity Risk Risk assessment risk attitudes Risk aversion Risk preferences Smoking Statistics Tradeoffs value of a statistical life |
title | The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals |
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