1. A worker, who is typical in all respects, works for a wage of $30,000 per year in a perfectly safe occupation. Another typical worker does a job requiring exactly the same skills as the first worker, but in a risky occupation with a known death probability of 1 in 1,000 per year, and receives a wage of $36,000 per year. What value of a human life for workers with these characteristics should a cost-benefit analyst use?
2. The construction of a dam that would provide hydroelectric power would result in the loss of two streams: one that is now used for sport fishing, and another that does not support game fish but is part of a wilderness area.
a. Imagine that a CV method is used to estimate the social cost of the loss of each of these streams. Would you be equally confident in the two sets of estimates? Why?
b. Consider two general approaches to asking CV questions about the streams. The first approach attempts to elicit how much compensation people would require to give up the streams. The second approach attempts to elicit how much people would be willing to pay to keep the streams. Which approach would you recommend? Why?