Stability of estimates of the compensation for danger

Abstract

Estimates of the extra earnings for jobs with higher risks of death are used in cost-benefit studies involving risk changes. Because of this use, the magnitude and stability of the estimated coefficient are important. Part of the current study closely reproduces the 1982 study by Marin and Psacharopoulos to check on the stability. We also examine the robustness of the estimate to the inclusion/exclusion of non-fatal risks and other relevant characteristics. While the magnitude of the coefficient has increased from the earlier study, the coefficient is robust to other changes in the specification. This yields a “value of life” figure of £9.7 million