Javier can earn $80,000 a year working as a firefighter, or $78,000 a year working as a police officer. The probability of death from working as a firefighter is 1/2,000, and the probability of death from working as a police officer is 1/4,000

Using the compensating differential approach and the above information, what is the value of Javier's life?

The value of life = ($80,000 - $78,000 ) / [(1/ 2,000 ) - (1/4,000 )] = $2,000 / [(2/4,000 ) - (1/4,000 )] = $2,000 / (1/4,000 ) = $8 million.