- a. (1) A survey would provide direct information on workers’ risk
perceptions.
(2) An indirect market approach would examine the wage premium
in risky jobs. For example, wages might be $5,000 per year higher
for a chemical worker than for a comparable factory worker as
compensation for job risk.
(3) Workers’ compensation might represent societal values. (If the
government, via medical insurance, pays part of the costs of
accidents, this cost also should be included.)
b. (1) A survey would attempt to evaluate the severity of noise problems
based on the testimony of residents.
(2) The cost of noise pollution would be reflected in lower property
values near airports.
(3) Unfortunately, society does not compensate affected homeowners
for noise-related costs. However, the government sets restrictions
on airline routes to reduce the worst incidences of noise pollution.
496 Chapter 11 Regulation, Public Goods, and Benefit-Cost Analysisc11RegulationPublicGoodsandBenefitCostAnalysis.qxd 9/29/11 1:34 PM Page 496