Risk-taking activities and heterogeneity of job-risk tradeoffs

Using data from a large national sample, this article examines how individual differences in risk attitudes affect wage-risk tradeoffs. Smoking and seat belt use are used as proxies for individual willingness to bear risk. Workers who by their behavior indicate a high value of safety-e.g., nonsmokers and seat belt wearers-receive a higher compensating differential per unit of job risk than do workers who engage in either one of the risky behaviors. For the overall sample, the implicit value of a lost workday injury is $79,632. This value ranges from $54,878 for smokers who do not wear a seat belt, to $102,552 for nonsmokers who wear a seat belt.