Skill and the Value of Life

Shogren, Jason F.; Stamland, Tommy

doi:10.1086/341875

Cited by 67 publications

(51 citation statements)

References 6 publications

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“…Siebert and Wei (1994) have also found that accounting for the endogeneity of risk can increase the risk premium compared to a standard least squares approach. Recent theoretical research, however, has also illustrated the potential for over-estimating the risk premium by failing to control for unobservables (Shogren and Stamland 2002). They note that workers with the ability to avoid injury select into risky jobs while those less able to avoid injury ("clumsy" workers) select into less-risky jobs.…”

Section: Wage Vs Log(wage)mentioning

confidence: 99%

The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World

2002

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A substantial literature over the past thirty years has evaluated tradeoffs between money and fatality risks. These values in turn serve as estimates of the value of a statistical life.This article reviews more than 60 studies of mortality risk premiums from ten countries and approximately 40 studies that present estimates of injury risk premiums. This critical review examines a variety of econometric issues, the role of unionization in risk premiums, and the effects of age on the value of a statistical life. Our meta-analysis indicates an income elasticity of the value of a statistical life from about 0.5 to 0.6. The paper also presents a detailed discussion of policy applications of these value of a statistical life estimates and related issues, including risk-risk analysis.

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Section: Wage Vs Log(wage)mentioning

confidence: 99%

The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World

2002

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“…Viscusi and Aldy (2003), for example, report an income elasticity of about 0.5-0.6. On the other hand though, Shogren and Stamland (2002) argue that the bias in estimating the compensating wage differential could 2 Compensating wage differentials have also been found, for example, for the risk of unemployment (Lalive et al, 2006;Moretti, 2000), for shift work (Kostiuk, 1990), and uncertainty with respect to future earnings (Feinberg, 1981).…”

Section: Related Literaturementioning

confidence: 99%

The Value of a Statistical Injury: New Evidence from the Swiss Labor Market

Kühn

Ruf

2008

SSRN Journal

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This paper deals with the compensation for non-fatal accident risk in Switzerland and presents empirical estimates of the value of a statistical injury. We approach the problem of endogenous sorting of workers into jobs with different accident risks based on unobserved productivity differences twofold. First, we have access to the number of accidents not only at the level of industries, but within cells defined over industry×skill-level of the job, which allows us to estimate risk compensation within groups of workers defined over the same cells. Second, we capitalize on the partial panel structure of our data which allows us to empirically isolate the wage component specific to the employer. Our different approaches to identification in fact yield very different estimates of the value of a statistical injury. Our preferred estimate gives an estimate of about 40,000 Swiss francs (per prevented injury per year). JEL classification: J31, J17Keywords: Compensating Wage Differentials, Value of a Statistical Injury, Risk Measurement, Unobserved Productivity * Olivier Steiger, Rainer Winkelmann and Josef Zweimüller provided many helpful comments and suggestions which significantly improved this study. We thank Alois Fässler from the Swiss Accident Insurance Fund (Suva) for providing us with the data and helpful guidelines concerning the data. We also thank Simon Büchi for reviewing parts of the code for the empirical analysis. Simone Gaillard and Jonathan Lorand proof-read the manuscript.

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“…Not only do these results call the reliability of former VSL-studies into question, they also provide new evidence on the ongoing theoretical debate on the direction of the potential bias in VSL studies if unobserved individual heterogeneity or productivity is ignored. The existing evidence suggests that the influence of differences in workers' unobserved risk-related productivity, which Shogren and Stamland (2002) demonstrate to be a source of upward bias of the VSL, is empirically more important than general differences in unobserved productivity, which impose a downward bias (Hwang, Reed, & Hubbard, 1992).…”

Section: Introductionmentioning

confidence: 99%

“…In order to obtain unbiased estimates for α CS from equation (2) the approximation of the job risk perceived by the individual through aggregate data has to be accurate and p j must be 8 uncorrelated with u ij . Provided the first condition can be fulfilled by using sufficiently detailed occupational/industry risk data, the validity of the second condition has been questioned by the theoretical papers of Hwang et al (1992) and Shogren and Stamland (2002).…”

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confidence: 99%

“…In contrast to general productivity, Garen (1988) and Shogren and Stamland (2002) make risk-specific productivity a subject of discussion. Riskspecific productivity is a feature of workers which -for example as a result of cool-headedness or good physical agility -enables them to be more productive in hazardous professions than "normal" workers, whilst playing no role in nonhazardous jobs.…”

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confidence: 99%

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Using Job Changes to Evaluate the Bias of the Value of a Statistical Life

Spengler

Schaffner

2007

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editors. Terms of use: Documents in Using Job Changes to Evaluate the Bias of the Value of a Statistical LifeAbstract This paper presents a new approach to obtain unbiased estimates of the value of a statistical life (VSL) with labor market data. Investigating job changes, we combine the advantages of recent panel studies, which allow to control for unobserved heterogeneity of workers, and conventional cross-sectional estimations, which primarily exploit the variation of wage and risk between different jobs. We find a VSL of 6.1 million euros from pooled cross-sectional estimation, 1.9 million euros from the static first-differences panel model and 3.5 million euros from the job-changer specification. Thus, ignoring individual heterogeneity causes overestimates of the VSL, whereas identifying the wage-risk tradeoff not only by means of between job variation (job-changer model) but also on the basis of noisy variation on the job (panel models) may lead to underestimates of the VSL. Our results can be used to perform cost-benefit analyses of public projects aimed at reducing fatality risks, e.g., in the domains of health, environmental or traffic policy. JEL Classification: I10, J17, J28, K00

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Skill and the Value of Life

Cited by 67 publications

References 6 publications

The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World

The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World

The Value of a Statistical Injury: New Evidence from the Swiss Labor Market

Using Job Changes to Evaluate the Bias of the Value of a Statistical Life

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