This topic contains a solution. Click here to go to the answer

Author Question: Does the principle of optimization imply that people always make the best choices? What will be ... (Read 108 times)

ssal

  • Hero Member
  • *****
  • Posts: 572
Does the principle of optimization imply that people always make the best choices?
 
  What will be an ideal response?

Question 2

What is meant by the value of a statistical life? Why is it calculated?How is it used by policymakers?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

gcook

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

Optimization is a good description of almost all human behavior, but this doesn't mean that people are always perfect calculators. Our decisions are roughly equal to the choices we would make if we always optimized. To an economist, optimization is a good approximation of the decisions that people make.

Answer to Question 2

The value of a statistical life is the implied value of life from individual choices between options with different but small probabilities of fatality risk.Put another way, it is the money value of a human life saved, or the economic value of reducing risks to life through policy decisions. This can be inferred from the decisions of governments and consumers.However, the value of a statistical lifeis not intended to be seen as a price tag on human life. Rather, it is useful to policymakers in making decisions about which public projectsroads, bridges, damsto undertake.As such, it can be employed as the basis of cost-benefit analysis, as well as in deciding how much people need to be compensated for certain risks that they take.
A-head: ECONOMIC TOOLS TO VALUE HUMAN LIFE
Concept: Value of a statistical life





 

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

The most destructive flu epidemic of all times in recorded history occurred in 1918, with approximately 20 million deaths worldwide.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

Cyanide works by making the human body unable to use oxygen.

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

For a complete list of videos, visit our video library