Abstract
This article investigates the relationship between cigarette smoking and illicit drug use and compensating wage differentials for the risk of job-related death. Knowledge of an individual's experiences with cigarettes and illicit drugs is used to identify worker heterogeneity in job-risk preferences. The results show that individuals who are both nonsmokers and nondrug users work in the safest jobs and receive the highest compensating wage differentials for job-related risk. Significant differences in job risk and compensating differentials are also found between smokers and nonsmokers and drug users and nondrug users. Estimates of the statistical value of life increase from $2.9 million to $7.1 million when moving from the full sample of workers to those individuals classified as nonsmokers and non-drug users.
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