Billy Bob earns $45,000 and faces a. 007 probability of dying in a workplace accident. Jim Bob earns $41,000 and faces a. 0038 probability of dying in a workplace accident. The two require the same level of skill and training. From this information, what is the implicit value of a person's life?

Answer: $1,250,000

Explanation:

The implicit value of a person's life can be found by using the elasticity approach.

i. e. On comparing the change/reduction in earnings with the change/reduction in probability of dying in a workplace accident.

Given:

Billy Bob earns $45000 with a 0.007 probability of accident

whereas,

Jim Bob earns $41000 with a 0.0038 probability of accident.

thus, value of life = (45000 - 41000) / (0.007 - 0.0038) = $1,250,000