Problem 13 - G. It is mid-2021, and you are trying to decide where to go on your first vacation in nearly two years. You have been vaccinated against Covid-19. Because of your vaccinated status, your risks of contracting Covid-19 are low, and your risks of being hospitalized or dying are very low, but not zero, especially due to variants of the virus emerging during this period. You are considering vacationing to one country (Country A) with very low Covid-19 caseloads, and you calculate your risk of contracting Covid-19 while there and dying is 1 in 10,000,000. You are willing to pay about $6,000 to go on that vacation. In the second country, Country B, you calculate that your risk of death is 1 in 1,000,000. You would pay about $5,500 to go on that vacation. You are otherwise indifferent between the two destinations the sun, sand, and sea are very similar, and that is what you are looking for.

You are relating the choice you are making to a friend who is also studying economics. They argue that you are being irrational that you are valuing your life far too highly in your willingness to pay such a premium for the lower-risk destination. In making their argument, they calculate your implied value of your life based on your valuations of these two vacation destinations.

What figure does your friend calculate for your implied value of your life? Do you agree that you are being irrational, and change your mind about the premium you are willing to pay to travel to Country A versus Country B?