Deck 10: Death and Injury in the Usworkplace-A Hedonic Analysis

Question 1

The value of a statistical life is defined as VSL=$B/S.What is the interpretation of B in this equation?

A) The number of lives saved.
B) The benefit derived from saving S lives.
C) The proportion of lives saved to the total population.
D) The total number of citizens considering the adoption of a new safety policy.
E) The amount it will cost a firm to save S lives.

Answer 1

B

Question 2

The total workplace injury rate _______ from 1990 to 2000 and _______ from 2000 onward.

A) rose;rose
B) rose;fell
C) fell;rose
D) fell;fell
E) was constant;fell

Answer 2

D

Question 3

In a hedonic model,each worker's utility,u,depends upon his consumption,c,and a single job attribute,z.If z represents fatality risk,risk averse individuals' indifference curves will:

A) be relatively flat.
B) be relatively steep.
C) be perfectly inelastic in z.
D) be perfectly elastic in z.
E) be downward sloping.

Answer 3

B

Question 4

The Occupational Health and Safety Act is charged with:

A) reducing workplace injuries and fatalities.
B) inspecting workplaces to ensure that firms provide workers with complete information about workplace safety.
C) ensuring an efficient level of workplace safety in the U.S.labor market.
D) ensuring American consumers are informed about workplace safety practices.
E) documenting workplace injuries and fatalities.

Question 5

According to the Pelzman effect,agents respond to inherent improvements in safety by _______ their own safety efforts.So,increases in workplace safety can potentially
Cause _______ in accidents.

A) increasing;an increase
B) increasing;a decrease
C) decreasing;an increase
D) decreasing;a decrease
E) leaving constant;an increase

Question 6

What does the term hedonic mean when used in the phrase hedonic pricing?

A) variable
B) increasing returns to scale
C) quality adjusted
D) constant returns to scale
E) constant

Question 7

Why will active government policy to increase workplace safety reduce overall welfare?

A) According to the assumptions of the hedonic wage model,there are a finite number of iso-profit curves.
B) Workers have incomplete information about workplace safety.
C) According to the assumptions of the hedonic wage model,the competitive market provides an efficient level of workplace safety.
D) Firms will attempt to get around the government's policy.
E) Firms will go out of business.

Question 8

Let $B denote the maximum combined amount that a group of workers is willing to pay to implement safety policy X.What is the formula for calculating the value of a
Statistical life,as defined by these workers?

A) VSL = $B/S where S is the number of workers whose lives will be saved by policy X
B) VSL = $B/S where S is the number of workers considering the adoption of policy X
C) VSL = $B*S where S is the number of workers whose lives will be saved by policy X
D) VSL = $B*S where S is the number of workers considering the adoption of policy X
E) VSL = $B+S where S is the number of workers considering the adoption of policy X

Question 9

Which of the following is NOT a plausible result of an increase in the generosity of benefit payments received under workers' compensation laws?

A) The proportion of fraudulent to legitimate claims will increase.
B) Employers will attempt to entice their workers back to work earlier.
C) Employers will employ more lax workplace safety standards.
D) Workers will increase the time spent out of work.
E) Employers will hire fewer workers.

Question 10

Under an experience-rated workers' compensation system,employers' insurance premiums increase with:

A) the length of time the firm has existed.
B) the number of employees laid off in the past year.
C) the amount paid to workers for prior workplace injuries.
D) the number of prior workplace injuries.
E) the number of workers laid off every year.

Question 11

How do economists estimate the value of a statistical life?

A) The value of a statistical life is equal to the slope of the hedonic wage locus,so economists estimate the hedonic wage locus.
B) The value of a statistical life is modeled using survey information from large samples of representative workers.
C) The value of a statistical life is determined by the median wage.
D) The value of a statistical life is equal to the intersection of the hedonic wage locus and the representative workers' iso-profit curve,so economists estimate the hedonic wage locus.
E) The value of a statistical life is estimated using the point of tangency between workers' iso-profit curves and firms' job package offers.

Question 12

Why are injury and fatality rates endogenously determined in the hedonic framework?

A) The hedonic wage locus is responsive to changes in economic policy.
B) The hedonic wage locus is NOT responsive to changes in economic policy.
C) The hedonic wage locus describes all of the (w,z)pairs that are offered in equilibrium and workers are NOT free to pick any pair that lies along the hedonic locus because of their heterogeneous tolerances for risk.
D) The hedonic wage locus describes all of the (w,z)pairs that are offered in equilibrium and workers are free to pick any pair that lies along the hedonic locus.
E) The hedonic wage is independent of workers' tolerance for risk.

Question 13

In the context of workers' compensation,the replacement rate is defined as:

A) the ratio of a worker's post-injury wage rate to his pre-injury wage rate.
B) the ratio of benefits payments to the workers' pre-injury earnings.
C) the rate at which firms are able to hire new workers to replace those that unexpectedly quit.
D) the rate at which disabled workers are able to find new jobs.
E) the speed with which firms are able to replace workers who quit.

Question 14

Assume that a job package is characterized by the pair (w,z)where w is the wage,and z is a single undesirable non-wage job attribute.A firm's iso-profit curves:

A) are finite in number.
B) correspond to exactly zero economic profits.
C) represent a set of (w,z)pairs that yield a particular equal level of profits.
D) are convex to the origin.
E) are strictly increasing.

Question 15

Fatality rates vary considerably from one industry to the next._______ is a particularly dangerous occupation while _______ is considerably safer.

A) Forestry;agriculture
B) Agriculture;fishing
C) Mining;forestry
D) Fishing;the service sector
E) Agriculture;mining

Question 16

In a hedonic wage model,heterogeneous workers and firms engage in positive assortative matching in equilibrium.Which of the following is an example of positive assortative
Matching?

A) Dangerous jobs are matched with brave workers and safe jobs are matched with
Wimpy workers.
B) Workers who are comparatively brave are paid less than wimpier workers.
C) Workers who are not equally skilled are paid the same wage.
D) Workers who are more able have more education.
E) Firms that employ comparatively brave workers earn positive economic profits.

Question 17

Hedonic pricing is NOT used to model:

A) Compensating wage differentials.
B) The choices workers make concerning levels of undesirable job attributes.
C) The wage increase required to take on some level of fatality risk.
D) The distribution of workers' tolerance for risk
E) The wage increase given to a worker with an additional year of education.

Question 18

Assume that a job package is characterized by the pair (w,z)where w is the wage,and z is a single undesirable non-wage job attribute.All else equal,a firm's profit is _______ in
W and _______ in z.

A) increasing;increasing
B) increasing;decreasing
C) decreasing;increasing
D) decreasing;decreasing
E) constant;decreasing

Question 19

The slope of the indifference curve in a hedonic wage model is the marginal rate of substitution (MRS)between consumption and the non-wage job attribute.Economically, this MRS is:

A) the bribe that is necessary to completely compensate the worker for a unit increase
In the non-wage job attribute.
B) the increase in wage that a worker is willing to forgo for a 1 percent increase in
His fatality risk.
C) negative if the non-wage job attribute is a good.
D) always equal to zero at the worker's utility maximizing point.
E) increasing with age.

Question 20

In a hedonic model,each worker's utility,u,depends upon his consumption,c,and a single job attribute,z.It is always true that z_______ in a hedonic model.

A) is a desirable job attribute
B) is an undesirable job attribute
C) represents a non-wage job attribute
D) measures a worker's risk of physical injury
E) is unchangeable