Question

2. We learned that wage data from high-risk jobs is used to determine the value of a statistical life. The idea is that the more likely workers are to die (or suffer injury) while working, the higher a wage workers will demand for the job.

Could the value of a statistical life be negative? Over and over again, in stories of natural disasters, we hear how the rescuers performing the riskiest jobs are unpaid volunteers or low-wage workers. Not only that, but according to the Washington Post, ‘People love to live in places that are at risk for disasters’.

Volunteering as a rescuer after a natural disaster is a very risky job, but people are willing to do it for free. Since other jobs in the area have positive wages, this means people are willing to accept lower wages to perform a riskier job. Since an increase in risk is associated with a fall in wages, this means that the value of a statistical life (VOSL) is negative. Or does it?

1. a. explain why the VOSL is NOT negative in the aftermath of a natural disaster, even if people are willing to volunteer (or accept very low wages) for very risky natural disaster relief work, or pay high rents to live in areas that are known to be at risk for disasters (such as earthquake-prone Victoria, B.C.).

Answer 1