Compensating differentials are higher salaries paid for jobs with greater danger or disutility. A more dangerous job must pay a compensating differential or no worker would be willing to accept it.

A job in a coal mine offers a starting salary of $50,000 per year. A clothing factory starts at an annual salary of only $20,000. The coal mine job is dangerous, with a 0.5% probability of employee death each year. At the clothing factory, serious injuries are rare and there is a near-zero probability of a work-related death.

Using both the compensating differential for mining coal and the miner’s probability of death, calculate the total monetary value of one human life, reflected by the amount of extra money the miner must be paid (the extra $30,000) to be willing to accept even a small risk of death (0.5%).

In addition, what other ethical issues would you also want to consider before offering a final monetary figure for the value of any one human life in a Cost- Benefit study?