Question

Fatal risks from commercial aviation are roughly 1 in 2 million takeoff-landing cycles An individual takes a job with 4 takeoff-landing cycles per week For N cycles Risk=1-(1-riskpercycle)N Job has an annual salary $10,000/ year more than alternative job What can we say about the individual’s valuation of fatal risk?

	1.	The individual values fatal risk at 1.2 million per statistical life.
	2.	The individual values fatal risk at less than 1.2 million per statistical life.
	3.	The individual values fatal risk at more than 1.2 million per statistical life.
	4.	The individual values fatal risk at less than 96 million per statistical life.
	5.	The individual values fatal risk at more than 96 million dollars per statistical life

Answer 1

Risk per cycle 0.0000005

No. of cycles per week 4

No. of week per year 52

Total cycles per year 208

Risk per year 0.000103995

Annual salary difference 10000

Valuation of risk 96158822.21 10000/.000104

Correct answer is "5) The individual values fatal risk at more than 96 million dollars per statistical life

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