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Social and Behavioral Sciences Commons™
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Full-Text Articles in Social and Behavioral Sciences
Measuring How Risk Tradeoffs Adjust With Income, Mary F. Evans, V. Kerry Smith
Measuring How Risk Tradeoffs Adjust With Income, Mary F. Evans, V. Kerry Smith
CMC Faculty Publications and Research
Efforts to reconcile inconsistencies between theory and estimates of the income elasticity of the value of a statistical life (IEVSL) overlook important restrictions implied by a more complete description of the individual choice problem. We develop a more general model of the IEVSL that reconciles some of the observed discrepancies. Our framework describes how exogenous income shocks, such as unexpected medical expenditures, may affect labor supply decisions which in turn influence both the coefficient of relative risk aversion and the IEVSL. The presence of a consumption commitment, such as a home mortgage, also alters this labor supply adjustment. We use …
A Quantile Estimation Approach To Identify Income And Age Variation In The Value Of Statistical Life, Mary F. Evans, Georg Schaur
A Quantile Estimation Approach To Identify Income And Age Variation In The Value Of Statistical Life, Mary F. Evans, Georg Schaur
CMC Faculty Publications and Research
In theory, heterogeneity in individual characteristics translates into variation in the marginal willingness to pay for a mortality risk reduction. Two dimensions of heterogeneity, with respect to income and age, have recently received attention due to their policy relevance. We propose a quantile regression approach to simultaneously explore these two sources of heterogeneity and their interactions within the context of the hedonic wage model, the most common revealed preference approach for obtaining value of statistical life estimates. We illustrate the approach using data from the Health and Retirement Study (HRS). We find that the impact of age on the wage–risk …