Valuing the Wellbeing Associated with Psychosocial Factors at Work

Psychosocial factors are one of today’s top challenges to occupational safety and health. Calculations of related societal costs generally focus on hard outcomes, such as productivity, but rarely include the value of individual utility reduction caused by psychosocial factors at work. We use the compensating-income-variation method to estimate the monetary value necessary to compensate individuals experiencing sub-optimal psychosocial factors at work. The data used to examine the statistical relationship between income, psychosocial factors at work, and happiness is from an Icelandic health and well-being survey conducted in 2007, 2009, 2012, and 2017. This allows us to estimate the intangible cost associated with psychosocial factors at work, as well as providing valuable information on which specific factors are most highly related to workers’ well-being. Out of all the psychosocial factors measured, we find that poor superior-subordinate communications have the strongest negative association with individuals’ happiness. Our CIV estimates range from $5,419 to $26,504 per year for men and $3,202 to $11,046 per year for women, depending on the psychosocial factor being examined. Thus, the cost associated with the utility reduction due to psychosocial factors at work is substantial.