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THE QUANTITY‐ADJUSTED VALUE OF LIFE
Author(s) -
Moore Michael J.,
Viscusi W. Kip
Publication year - 1988
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1988.tb01502.x
Subject(s) - economics , value of life , ex ante , wage , compensation (psychology) , spouse , value (mathematics) , differential (mechanical device) , duration (music) , compensating differential , actuarial science , labour economics , life insurance , demographic economics , microeconomics , efficiency wage , wage share , psychology , statistics , mathematics , social psychology , art , literature , sociology , anthropology , engineering , macroeconomics , aerospace engineering
The traditional compensating differential analysis is extended to reflect the effects on wages of the duration of life at risk and of insurance benefits to the surviving spouse and dependents. The implicit discount rate that workers use in making their life‐cycle employment decisions is also estimated. The revealed discount rate ranges from 10 to 12 percent, and the implicit value per year of life is 175,000. There is also evidence of significant wage reductions resulting from higher workers' compensation benefits for fatal and nonfatal injuries, suggesting an important tradeoff between ex ante and ex post compensation for risk.