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1. Read the following passage from an article in the Wall Street Journal (October 3, 1195, p. B1) and answer the following question. Diabetic Toby Warbet quit her secretarial job last year because of physical problems, including blurred vision and a general loss of sensation. Such was her desperation that when she heard about an unproven treatment that might help her, she decided to borrow $20,000 from relatives to pay for it... "Even if the chances are one in a million, I was hoping I would be the one, "says the Livingston, NJ resident.
a. Use the human capital approach to provide a monetary estimate of the value of Toby Warbet's life as of October 3, 1995. Explain.
b. Use the willingness to pay approach to estimate the value of Toby Warbet's life. Explain.
c. Provide a reason for the discrepancy between the two approaches.
d. How might you measure the value of Toby Warbet's life using the human capital approach and attain a figure close to the willingness to pay approach?
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