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Comparative Analysis of Hedonic Wage and Discrete Choice Models in Valuing Job Safety

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  • Zhang Nan

    (Trento University, Department of Economics and Management, Via Vigilio Inama, 5, 38122, Trento TN, Italy)

Abstract

This is the first study to compare the hedonic wage and discrete choice models in the context of real job market choices. The hedonic wage method is the most widely adopted approach in estimating the value of marginal changes in mortality risks (or value of a statistical life, VSL). Alternatively, the discrete choice model offers a framework for valuing non-market goods, often used in choice experiments involving hypothetical job selection scenarios. This study employs both the hedonic wage and discrete choice models, using real market data from Taiwan‘s Panel Survey of Family Dynamics (PSFD 2016-2018), to examine workers‘ industry choices and infer their willingness to pay for job safety. By comparing the estimation results from the discrete choice model and the hedonic wage model, this study finds that the marginal willingness to pay (MWTP) for risk reduction estimated from discrete choice models is unreasonably large and therefore prefers the hedonic wage model in estimating the value of job safety. The findings of this study contribute to the literature comparing the hedonic model and the discrete choice model in evaluating environmental goods, which are mainly conducted using housing market data.

Suggested Citation

  • Zhang Nan, 2025. "Comparative Analysis of Hedonic Wage and Discrete Choice Models in Valuing Job Safety," Central European Economic Journal, Sciendo, vol. 12(59), pages 1-16.
    • Handle: RePEc:vrs:ceuecj:v:12:y:2025:i:59:p:1-16:n:1001
    DOI: 10.2478/ceej-2025-0001
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    References listed on IDEAS

    as
    1. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    2. Banzhaf, H. Spencer, 2022. "The Value of Statistical Life: A Meta-Analysis of Meta-Analyses," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 13(2), pages 182-197, July.
    3. Cragg, Michael & Kahn, Matthew, 1997. "New Estimates of Climate Demand: Evidence from Location Choice," Journal of Urban Economics, Elsevier, vol. 42(2), pages 261-284, September.
    4. Wong, Maisy, 2010. "The Relationship between Marginal Willingness-to-Pay in the Hedonic and Discrete Choice Models," MPRA Paper 51218, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Nonmarket valuation; Hedonic wage model; Random utility model; Value of safety; VSL;
    All these keywords.

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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