Cigarette Smoking, Seatbelt Use, and Differences in Wage-Risk Tradeoffs

Using an original data set that allowed us to measure the job risk perceived by individuals as well as smoking and seatbelt use, we found that cigarette smokers and nonseatbelt wearers receive a lower compensating differential for risk than nonsmokers and seatbelt wearers. While workers on average have an implicit value of a nonfatal lost workday injury of $48,000, this value is $81,000 for nonsmoking workers who wear seatbelts, with no evidence of a positive valuation for workers who smoke and do not wear a seatbelt. Our results imply that individual differences in other health-related activities are influential determinants of the observed wage-risk tradeoff. We also found significant compensating differentials for several nonrisk job attributes.

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